Vietnam Economic Forecast

Vietnam Economic Outlook

July 17, 2018

The economy maintained a stellar stride in H1, albeit losing steam slightly from the growth rate recorded in the first three months of the year. Robust exports again led to a strong expansion in the manufacturing sector in the first half of the year. Moreover, retail sales grew at a double-digit rate in the second quarter, despite higher inflation stemming from a slide in the dong amid a broader sell-off in emerging market currencies due to rising rates in the U.S. In H1 overall, foreign direct investment (FDI) continued to surge, as more companies seek to diversify out of China. Recent government data showed that FDI in the first six months already surpassed the total influx in 2017. That said, the Vietnamese stock market has been characterized by volatility recently, with a huge outflow of hot money, largely owing to mounting trade war fears.

Vietnam Economic Growth

Another year of stellar growth is expected, thanks to continued robust demand for manufacturing exports and an ongoing surge in FDI inflows that should support export-oriented industries. Rising household incomes and an expansion in private credit should help keep private consumption growth robust. That said, the rapid surge in credit could pose risks to financial stability in the medium-term, although the government’s restricted lending to less productive industries should help 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 up 0.1 percentage points 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 Yield4.85-0.13 %Jul 17
Exchange Rate23,0510.01 %Jul 17
Stock Market9210.15 %Jul 17

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