We are happy to introduce to you our “Vietnam Macroeconomic Report – August 2017”. The report belongs to our series of our monthly market research publications for Vietnam.
In this report you can find our review of the main economic developments in July 2017 and a forecast of economic indicators for the remaining quarters of 2017.
The global economy showed some positive signs, but new risks started to emerge. The US economy continued to show potentials for a positive growth rate, which could be seen from consumption and manufacturing indices and an improvement in employment. However, the strong recovery in the economies of the US’s important partners, which include the Eurozone and Japan, resulted in the steepest drop in the USD in the last 2 years. New economic risks started to emerge, as the increase in the impact of political tensions coming from Korean Peninsula is beyond the control of major economies.
The Vietnam economy continued to recover thanks to the growth in the service sector and exports. Industrial manufacturing showed some improvement in July. Most notably, the mining sector recovered as crude oil prices rose, in fact, were above 50USD/barrel, which enhances the prospect of producing 1 million more tons of crude oil to boost economic growth. Meanwhile, the slow disbursement process from the state budget was still the biggest challenge to the government’s target for increasing the total investment capital to boost growth.
The average interest rate decreased slightly in the second half of the year. Interest rates in July dropped due to the fall in inflation in the first 6 months, which made the State Bank of Vietnam (SBV) cut the policy interest rate to boost credit. Interest rates will continue to follow the downward trend because of the fall in expected inflation. However, since credit had grown at a higher rate than capital mobilisation recently, we believe that interest rates will fall gently.
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