Boston, MA -- (SBWIRE) -- 09/30/2013 -- Vietnam recorded a relatively weak real GDP growth figure of 5.0% year-on-year (y-o-y) in Q2 2013, up only slightly from 4.9% in Q1 2013. The latest GDP print also suggests to us that further efforts by the Vietnamese government to speed up the restructuring of debt-laden banks and restart lending to small and medium-sized enterprises (SMEs) may be necessary to support economic growth over the coming quarters. Moreover, given that we have recently begun to see signs of a slowdown in economic activity across the region, 2013 looks increasingly precarious for the Vietnamese economy. With this in mind, certain elements of the freight mix have seen their y-o-y growth forecasts downgraded slightly this quarter.

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Foreign direct investment (FDI) will continue to play a crucial role in driving Vietnam's economic growth over the coming quarters, and we view the recent uptick in FDI inflows into the country as a positive sign that the economic rebound is gathering pace. The shipping sector will be no different in this regard.

Total foreign direct investment in industrial parks (IPs) and economic zones (EZs) in Vietnam reached an estimated US$110bn by the end of June 2013, according to the country's Ministry of Planning and Investment. IPs alone attracted around 4,665 FDI projects totalling US$70bn, while coastal and border EZs have attracted US$40bn and US$700mn in foreign investment, respectively. Vietnam remains one of the favourite investment destinations for multinational companies despite the country's turbulent economic environment and uncertainties over the country's short-term growth outlook. This continues to provide encouragement for Vietnam's freight mix going forward.

Exports from Asian steelmakers have begun to be cut due to cross-border trade disputes, Reuters reported in July 2013. In developments that could dent the Vietnamese freight industry, a group of US steel pipe makers asked the US International Trade Commission in a bid to halt alleged unfairly traded steel products from outside of the US, including Vietnam, India and South Korea. Speaking to Reuters, Dinh Huy Tam, general secretary of Vietnam Steel Association, said: 'If they lose the case, for sure Vietnamese companies will face more difficulties in exporting steel overseas, especially to the United States.'

Meanwhile, Ryuichi Yamashita, director at Japan's Ministry of Economy, Trade and Industry, voiced his concerns: 'Should other countries accelerate steel exports to areas where there is strong demand, it may spark off a trade war and I am afraid that Japan will get caught up because we are an exporter.'

Headline Industry Data

- 2013 rail freight tonnage is set to increase by 4.12% to 7.29mn tonnes.
- 2013 air freight tonnage is forecast to rise by 13.13% to 202,170 tonnes.

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