Business Monitor International


Vietnam Business Forecast Report

Published 19 November 2014 | Quarterly

  • 49 pages
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$1,195.00
Vietnam Business Forecast 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.

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...

Table of Contents

Executive Summary
5
Core Views
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Ratings
7
Domestic Politics
8
Pushing Ahead With Reform, But Large Challenges Remain
8
table: Political Overview
8
Long-Term Political Outlook
10
Key Political Challenges Over The Coming Decade
10
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Ratings
13
Economic Activity
14
Economy Still On Track To Hit 2014 Growth Forecast of 5
14
table: ECONOMIC ACTIVITY
14
table : FOREIGN DIRECT INVESTMENT BY COUNTRY OF ORIGIN (TOP FIVE)
15
Balance Of Payments
16
External Sector To Remain Stable
16
table: Current Account
16
table : FOREIGN DIRECT INVESTMENT BY COUNTRY OF ORIGIN (TOP FIVE)
17
Monetary Policy
18
Downside Risks To Interest Rate Forecast
18
table: Monetary Policy
18
Fiscal Policy
20
Fiscal Deficit To Be Slowly Reined In
20
table: Fiscal Policy
20
Chapter 3: 10-Year Forecast
23
The Vietnamese Economy To 2023
23
A New Focus On Quality Growth
23
table: Long-Term Macroeconomic Forecasts
23
Chapter 4: Business Environment
27
SWOT Analysis
27
BMI Business Environment Risk Ratings
27
Business Environment Outlook
28
Institutions
28
TABLE: BMI Business And Operation Risk Ratings
28
TABLE: BMI Legal Framework Rating
29
Infrastructure
30
TABLE: Labour Force Quality
31
Market Orientation
32
TABLE: Asia Annual FDI Inflows
32
TABLE: Trade And Investment Ratings
34
Operational Risk
35
Chapter 5: Key Sectors
37
Defence
37
table: Defence Expenditure 2010-2018
38
Freight Transport
41
Table: Road Freight, 2011-2018
42
Table: Inland Waterway Freight, 2011-2018
43
Other Key Sectors
45
table : Oil & Gas Sector Key Indicators
45
table : Pharma Sector Key Indicators
45
table : Autos Sector Key Indicators
45
table : Telecoms Sector Key Indicators
46
table : Food & Drink Sector Key Indicators
46
TABLE: Infrastructure Sector Key Indicators
46
Chapter 6: BMI Global Assumptions
47
Global Outlook
47
Growth Increasingly Polarised
47
Table: Global Assumptions
47
Table: Developed States, Real GDP GrowtH, %
48
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
48
Table : Emerging Markets , Real GDP Growt h, %
49

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.
  • Contextualise Vietnam's country risks against regional peers using BMI's country comparative Risk Rankings system.
  • Evaluate external threats to doing business in Vietnam, including currency volatility, the commodity price boom and protectionist policies.

The Vietnam Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the Vietnam economic policy-making and performance impact on corporate profitability over 2014-2018?

BMI provides our fully independent 5-year forecasts for Vietnam through end-2018 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Vietnam Business Forecast Report features BMI's forecasts with supporting analysis for 2014 through to end-2018, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Rankings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2018 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Vietnam and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Vietnam, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Vietnam over the next 5-years?

BMI's Vietnam country Risk Rankings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Vietnam Market - Political Strengths, Weaknesses, Opportunities and Threats facing Vietnam.
  • Political Stability and Risk Assessment - BMI's Risk Rankings assess explicit short- and long-term risks to political stability; latest ankings, rankings and trends for Vietnam's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark Vietnam's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Rankings with SWOT Analysis - Business Environment Risk Rankings for Vietnam, benchmarked against rankings for regional neighbours.

Country Competitiveness - Competitiveness of Vietnam's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Rankings.

Key Sector Outlook

Which industry sectors in Vietnam will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in Vietnam's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2009-2013, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2014-2018, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express