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New Market Report: Vietnam Business Forecast Report Q2 2014

New Country Reports market report from Business Monitor International: "Vietnam Business Forecast Report Q2 2014"

 

Boston, MA -- (ReleaseWire) -- 04/02/2014 -- Evidence of improving macroeconomic fundamentals in Vietnam, a strong real GDP growth reading of 6.0% year-on-year (y-o-y) in Q413, accelerating foreign direct investment inflows, robust remittances and merchandise trade exports, have all reaffirmed our conviction that the Vietnamese economy will begin 2014 on a strong note. We forecast real GDP growth to come in at 5.9% in 2014, versus Bloomberg consensus of 5.5%.

We expect benign inflation, improving current account dynamics, and the Vietnamese government's stance on prioritising macroeconomic stability over rapid growth, to continue to underpin the stability of the Vietnamese dong over the coming months. Over the medium term, we see scope for the currency to appreciate to around VND20,560/ US$ by the end of 2014, supported by a robust outlook for foreign direct investment (FDI) inflows and remittances.

We believe that private sector driven economic growth over the coming years should bode well for tax revenue growth and bolster Vietnam's fiscal position. Good progress on fiscal reforms will see Vietnam's budget deficit narrow from a projected 5.1% of GDP in 2013 to 4.0% of GDP by 2015.

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Major Forecast Changes

We have revised down our average 2014 headline consumer price inflation forecast from 6.8% to 5.8% to reflect recent data indicating benign inflationary pressures.

Key Risks To Outlook

Downside Growth Risks From Rising Commodity Prices: Should commodity prices witness a strong rebound in 2014, we could see the central bank adopting a more hawkish stance on monetary policy. The risk of having to hike interest rates aggressively would present significant downside risks to economic growth.

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