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Vietnam Business Forecast Report Q2 2013 - New Report Available

New Country Reports research report from Business Monitor International is now available from Fast Market Research


Boston, MA -- (SBWIRE) -- 04/15/2013 -- Core Views

Vietnam's real GDP growth accelerated from 5.1% year-on-year (yo- y) in Q312 to 5.4% in Q412, reinforcing our view that the economy is poised for a robust recovery in H113. We see scope for a robust rebound in private sector investment growth as lending rates decline over the coming months.

The latest figures published by the State Bank of Vietnam (SBV), which showed headline consumer price inflation (CPI) accelerating from 6.8% y-o-y in December to 7.1% in January, have fuelled concerns that inflationary pressures could intensify over the coming months. From our perspective, however, we believe that subdued credit growth and a benign outlook for food prices in H213, should keep inflation in check through the year. Accordingly, we reiterate our view that the SBV will keep its policy rate on hold at 9.00% through 2013.

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We continue to view tax reforms as a crucial element in addressing the government's fiscal imbalances over the long run. Good progress on tax reforms could therefore, present upside risks to our forecasts for Vietnam's budget deficit to narrow from 5.0% of GDP in 2013 to just 0.9% by 2022.

Major Forecast Changes

We have upgraded our real GDP growth forecast from 6.5% to 7.0% for 2013.

We expect Vietnam to run a relatively balanced current account with a negligible deficit of just 0.1% of GDP in 2013.

Key Risks To Outlook

Downside Growth Risks From Rising Commodity Prices: Should commodity prices witness a strong rebound in 2013, we could see the central bank adopting a more hawkish stance on monetary policy. The risk of having to hike interest rates aggressively would present significant downside risks to economic growth.

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