Vietnam External Debt (USD bn)

After a swift expansion in Q3 last year, economic momentum weakened in Q4 as slowdowns in services, industrial activity and construction more than offset an acceleration in the agriculture, forestry and fisheries sector. Higher inflation, dwindling exports and tighter financial conditions dragged on activity. Turning to Q1, our panelists project that growth will accelerate. After China’s reopening, services exports will receive a boost from renewed inflows of Chinese tourists—who made up one-third of Vietnam’s tourist arrivals in 2019. That said, annual merchandise export growth plunged into a steeper contraction in January compared to the Q4 average, likely amplified by lost activity as the Lunar New Year fell in the month this year. Moreover, in the same period industrial activity also contracted sharply, and inflation accelerated, boding even worse for activity.