Country Report Vietnam February 2009

Summary

The ruling Communist Party of Vietnam will keep a tight grip on power in 2009-10, rejecting calls from some quarters (especially from groups of overseas Vietnamese) for political pluralism.
The government will execute a US$1bn stimulus package, while also implementing tax breaks to individuals and small and medium-sized firms.
The State Bank of Vietnam (SBV, the central bank) will continue to ease monetary policy to spur economic activity.
The Economist Intelligence Unit has revised its forecast for real GDP growth in 2009 down to 0.3%, from 3% previously, reflecting the poor outlook for growth in exports, private consumption and investment.
Inflation is forecast to slow to an average of 4.3% in 2009 and will stay relatively low in 2010, as external supply-side pressures remain weak.
We forecast that the value of the dong against the US dollar will fall by around 9% (in nominal terms) in 2009 to D17,903:US$1, and will fall further (albeit at a slower pace) in 2010.
The current-account deficit will narrow in 2009-10 as a result of a reduction in the trade deficit.

Officials in Ho Chi Minh City have begun blocking foreign investors and company directors from leaving the country if it is found that they owe government taxes, social insurance payments or salaries to employees.
On February 1st the central bank reduced its benchmark interest rate from 8.5% to 7%.
The government will now offer an interest subsidy of 4 percentage points on short-term loans to small and medium-sized enterprises.
The government has also announced that it will not collect personal income taxes until at least the end of May.
The official statistics show that in January industrial output fell by 4.2% year on year.
Inflation continues to abate. Prices were up by 17.5% year on year in January, from 20% in December and down from a high of 28.3% in August last year.
The value of Vietnam's international trade contracted sharply in January, reflecting the poor state of the external sector. The trade deficit stood at just US$300m in January.

Source: Country Report

This report covers the following industry codes:
SIC Code: 49;60;37;65;53
NAICS Code: 22;52;336;53;44