Vietnam Economic Forecast

Vietnam Economic Outlook

February 20, 2018

Last year’s notable growth momentum appears to have spilled over into 2018. In January, industrial production soared, owing to an expansion across all sub-sectors and a favorable base effect. Retail sales also climbed in the month, albeit at a slightly slower pace, likely owing to a seasonally-induced moderation in credit growth. A surge in private sector credit, under the mandate of the State Bank of Vietnam, has propped up private consumption and in turn fueled a strong retail sector. Foreign direct investment (FDI)—one of the key drivers of the economy’s stellar growth trajectory—accelerated again by double-digit figures, with most overseas funds flowing into labor-intensive, export-oriented manufacturing and processing industries. The external sector also contributed to growth in January. Exports surged two-fold year-on-year in the month compared to December. Although imports jumped by more, the total value of exports exceeded imports, thus swinging the trade balance to surplus.

Vietnam Economic Growth

Growth is set to remain robust this year, thanks to buoyant exports and high FDI levels supporting export-oriented industries. Solid domestic demand, shored up by steeply rising private sector credit, and thriving tourism activity should also bolster growth. However, the scale of the credit boom is raising concerns that a 2011-style banking crisis could unfold. A sizeable number of non-performing loans have left the banking sector vulnerable to shocks. 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

20122013201420152016
Population (million)88.889.790.791.792.6
GDP per capita (USD)1,7541,8942,0292,0342,111
GDP (USD bn)156170184186196
Economic Growth (GDP, annual variation in %)5.25.46.06.76.2
Consumption (annual variation in %)4.95.26.19.3-  
Investment (annual variation in %)1.95.39.39.4-  
Industrial Production (annual variation in %)6.45.97.610.07.3
Unemployment Rate3.23.63.43.4-  
Fiscal Balance (% of GDP)-3.4-6.6-6.3-5.0-5.5
Public Debt (% of GDP)47.951.855.158.362.4
Money (annual variation in %)18.518.917.716.2-  
Inflation Rate (CPI, annual variation in %, eop)6.86.01.80.64.7
Inflation Rate (CPI, annual variation in %)9.36.64.20.62.7
Inflation (PPI, annual variation in %)3.45.33.3-0.3-0.5
Policy Interest Rate (%)9.007.006.506.506.50
Exchange Rate (vs USD)20,84021,09521,38822,48522,771
Exchange Rate (vs USD, aop)20,87421,02921,19821,92922,370
Current Account (% of GDP)6.04.65.10.34.6
Current Account Balance (USD bn)9.37.79.40.69.0
Trade Balance (USD billion)2.00.40.8-4.12.1
Exports (USD billion)114133150162177
Imports (USD billion)112133149166174
Exports (annual variation in %)20.016.512.67.99.0
Imports (annual variation in %)7.918.212.311.35.0
International Reserves (USD)25.625.934.228.336.5
External Debt (% of GDP)39.538.539.341.7-  

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Vietnam Facts

ValueChangeDate
Bond Yield4.29-0.13 %Feb 22
Exchange Rate22,7230.01 %Feb 22
Stock Market1,0760.15 %Feb 22

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