We are very happy to introduce to you our “Vietnam Macroeconomic Report – Q2/2017”, which belongs to our series of monthly market research publications for Vietnam.
The world economy has continued to flourish thanks to vibrant manufacturing activities, increasing consumer demand and a recovery in the labour market in the US and the EU. In addition, global economic and political risks tended to reduce. Terrorist attacks orcured with low frequency and did not have much impact on the economy. Political tension on the Korean peninsula remained under control. However, the outbreak of Qatar diplomatic crisis at the end of the second quarter made the prospect of oil price recovery become unlikely.
Vietnam's economic growth spurted in the second quarter thanks to the important contribution of the service sector. Moreover, the high growth rate in the second quarter, which took place in the context of low inflation, was a good signal for the economy. This implies that monetary policy still has enough room to support the economic growth. As a result the State Bank of Vietnam (SBV) cut interest rates in early July to stimulate credit expansion.
Concerns about macroeconomic instability in the following years can make the private sector not to expand investment yet. This is likely to be the main factor causing the economic growth to be unlikely to reach the 6.7% target which was set by the Government earlier this year.
Vietnam economy is expected to grow at a rate of 6.4% at the end of the year with low inflation (2.3%). Service sector is expected to expand at a moderate pace; Industrial and construction sectors tend to recover; and opportunities for exports also increases widely. A higher growth, however, can only be achieved if the government persuades the enterprises and investors of its ability to control macroeconomic risks in the following years when credit growth still maintains at a high level.
Download the full report here to access to the latest information about the Vietnamese economy.