Vietnam Business Forecast Report Q1 2015 - New Market Report

Core Views

* Vietnam will remain susceptible to maritime confrontations with China, despite the recent easing of tensions. Meanwhile, Vietnam will continue to court India and the US in a bid to counterbalance China's growing influence in the region. That said, Hanoi will seek to avoid a breakdown in relations with Beijing, given China's importance as a trade partner.
* We expect solid growth momentum in the Vietnamese economy to be carried over to 2015, on the back of continued foreign direct investment (FDI) inflows, strong performance in the manufacturing and export sectors, and ongoing efforts by the government to address the high level of bad debts in the banking sector. We maintain our forecast for real GDP to grow at 5.7% in 2014, ahead of an acceleration to 6.4% in 2015.
* Vietnam's external health will improve gradually over the coming years, as we expect a gradual narrowing of the country's fiscal deficit. We forecast for Vietnam's external debt as a share of GDP to fall from an estimated 37.6% in 2013 to 22.0% by 2023.
* While Vietnam is enjoying strong economic growth and low inflation, we expect the State Bank of Vietnam (SBV) to cut its benchmark interest rate by 50 basis points (bps) to 6.00% in 2015 to support flagging local businesses and spur credit growth. This would push government bond yields lower. However, further yield compression thereafter will be limited owing to expected strong GDP growth.
* On the back of an improving Vietnamese economy, fiscal reform efforts by Hanoi should lead to an improvement in the country's fiscal health and limit growth in public debt. We forecast the country's budget deficit to narrow from 4.7% in 2013 to 3.8% in 2014 and 3.0% in 2015.

Full Report Details at
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Key Risks To Outlook

* The potential for renewed maritime dispute with China poses downside risks to our 2015 real GDP growth forecast of 6.4%.
* Should the US economic recovery hit a standstill, this would pose a salient risk to Vietnam's export sector, and consequently...

The Vietnam Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Vietnam and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Vietnam's economic, political and financial prospects through end-2018, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

* Forecast the pace and stability of Vietnam's economic and industry growth through end-2018.
* Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
* Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.

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