Country Report Vietnam September 2017

Country Report Vietnam September 2017

  • September 2017 •
  • Report ID: 2557471 •
  • Format: PDF

Outlook for 2017-21



  • The Economist Intelligence Unit expects that Vietnam will remain a one-party state in the forecast period, ruled by the Communist Party of Vietnam (CPV). Nonetheless, some internal differences will be seen over policy positions.
  • Ties with China will be prone to setbacks owing to territorial disputes in the South China Sea. Vietnam will persist with its omnidirectional policy, seeking to deepen ties with regional powers, such as India and Japan, and the US.
  • The government will continue to liberalise the economy, especially inter-national trade, while restructuring banks and state-owned enterprises. However, progress will remain uneven owing to strong vested interests.
  • The central bank will maintain an accommodative monetary policy stance until mid-2018, when we expect it to start raising interest rates gradually amid renewed price pressures and stronger depreciatory pressures on the dong.
  • Economic growth will remain relatively strong in the first half of the forecast period, averaging 6.4% a year in 2017-19. The pace of expansion will moderate to 6% on average in 2020-21, as both domestic and external demand cool.
  • The current account will return to deficit in 2017, reflecting a declining trade surplus and widening shortfalls on the services and primary income accounts. The deficit will widen in 2018-21 but remain at a manageable level.


Review



  • On August 2nd German authorities said that there were no grounds to doubt that Vietnam took part in Trinh Xuan Thanh's forced removal from the capital, Berlin. Mr Thanh, a former executive at state-owned PetroVietnam, had been sought for the alleged mismanagement of some of the firm's operations.
  • The Central Committee Secretariat of the CPV sacked the deputy trade and industry minister, Ho Thi Kim Thoa, for the mismanagement of a state-owned enterprise, Dien Quang Lamp Company.
  • Vietnam's defence minister, Ngo Xuan Lich, met his counterpart in the US, James Mattis, on August 8th. Both sides agreed that a US aircraft carrier would visit Vietnam in 2018-something that has not happened since 1975.
  • On August 18th a spokesperson for Vietnam's Ministry of Foreign Affairs, Le Thi Thu Hang, confirmed that the country had procured BrahMos missiles from India. The missiles have a range of up to 300 km.
  • Resolution 42, which was passed by the National Assembly (the legislature) in June, came into effect on August 15th. It includes new regulations to more effectively tackle non-performing loans in the banking system.
  • Economic activity stayed robust in August, with industrial production, retail sales and exports rising by 8.4%, 12.7% and 13.1% year on year, respectively.


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