Country Report Vietnam March 2009

Summary

The ruling Communist Party of Vietnam will keep a tight grip on power in 2009-10, rejecting calls from some quarters (and especially from groups of overseas Vietnamese) for political pluralism.
The government will put in place a US$1bn stimulus package, while also implementing tax breaks for individuals and small and medium-sized firms.
The State Bank of Vietnam (SBV, the central bank) will continue to loosen monetary policy in order to spur economic activity.
The Economist Intelligence Unit forecasts that real GDP will grow by just 0.3% in 2009, reflecting the poor outlook for growth in exports, private consumption and investment.
Inflation is forecast to slow to an average of 4.9% in 2009, and it 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 decline 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.

The Japanese government has announced that it will resume official lending to Vietnam. Lending was suspended pending the satisfactory resolution of a bribery scandal.
From March 1st the required ratio of cash reserves to dong deposits was lowered to 3%, from 5% previously.
The EU has shown considerable interest in negotiating a free-trade agreement with Vietnam.
The value of exports reached just US$4.3bn in February, bringing the total for the first two months of 2009 to US$8bn, down by 5.1% from the year-earlier period.
The important seafood industry is being squeezed by both declining demand and a fall in output.
Industrial production rose by just 2.5% year on year in January-February.
In the first two months of the year new FDI commitments totalled just US$1.5bn, representing a fall of 64.1% compared with the year-earlier period.
Vietnams first major oil refinery was opened on February 22nd.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;48
NAICS Code: 52;517