Vietnam Economic Forecast

Vietnam Economic Outlook

August 21, 2018

Recent data indicates that the economy continued to grow robustly at the start of the third quarter. In July, industrial production surged due to upturns in the manufacturing and electricity supply sectors, and retail sales growth accelerated as inflation moderated and strengthened consumers’ purchasing power. On the downside, the trade balance swung into negative territory in July as imports outpaced exports, while agricultural output contracted in the month. Moreover, although the economy continued to attract a healthy stream of foreign direct investment (FDI), the rate of inflow moderated in the first seven months compared to the first six months. In other news, Moody’s upgraded Vietnam’s credit rating from Ba3 to B1 on 10 August, citing the country’s growth potential supported by improving productivity from the increasingly efficient use of labor and capital, along with its declining reliance on foreign-currency debt.

Vietnam Economic Growth

Demand for exports is expected to remain solid. This, along with the strong FDI inflows supporting export-oriented industries, should fuel another year of robust growth. Private consumption growth is expected to remain buoyant on rising incomes and rapid credit expansion. Although the speed at which credit and private debt are ballooning poses risks to financial stability in the medium-term, the government’s restricted lending to less productive industries should mitigate those risks. Headwinds also stem from negative spillover effects arising from escalating global trade tensions. FocusEconomics panelists expect the economy to expand 6.7% in 2018, which is unchanged from last month’s forecast, and 6.6% in 2019.

Vietnam Economy Data

Population (million)89.890.791.792.793.6
GDP per capita (USD)1,8932,0292,0332,1102,355
GDP (USD bn)170184186196221
Economic Growth (GDP, annual variation in %)
Consumption (annual variation in %)  
Investment (annual variation in %)  
Industrial Production (annual variation in %)5.97.610.07.39.4
Unemployment Rate3.
Fiscal Balance (% of GDP)-6.6-6.3-6.3-5.6-  
Public Debt (% of GDP)51.855.057.059.8-  
Money (annual variation in %)18.917.716.218.4-  
Inflation Rate (CPI, annual variation in %, eop)
Inflation Rate (CPI, annual variation in %)
Inflation (PPI, annual variation in %)5.33.3-0.3-0.52.8
Policy Interest Rate (%)7.006.506.506.506.25
Exchange Rate (vs USD)21,09521,38822,48522,77122,710
Exchange Rate (vs USD, aop)21,02921,19821,92922,37022,716
Current Account (% of GDP)
Current Account Balance (USD bn)
Trade Balance (USD billion)0.40.8-
Exports (USD billion)133150162177215
Imports (USD billion)133149166174212
Exports (annual variation in %)16.512.
Imports (annual variation in %)18.212.311.35.021.4
International Reserves (USD)25.934.228.336.5-  
External Debt (% of GDP)38.539.341.744.5-  

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Vietnam Facts

Bond Yield5.07-0.13 %Sep 14
Exchange Rate23,2490.01 %Sep 14
Stock Market9910.15 %Sep 14

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