2019 02 20 EIU Vietnam Country Forecast Feb 2018

Country Forecast
Vietnam
February 2019
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Vietnam 1
Country forecast overview

Highlights • The Communist Party of Vietnam (CPV) will maintain a firm grip on
power, despite factional splits over economic and foreign policy. There will be
no credible threat to the CPV’s rule during the 2019-23 forecast period, and the
party’s opponents—both internal and external—will find it more difficult to voice
dissenting opinions.
• Vietnam will maintain an omnidirectional foreign policy. Relations with
China will remain strained, owing to territorial disputes in the South China Sea.
The authorities will be keen to cultivate links with other regional powers, such
as Japan and India, to counterbalance China’s growing influence in Asia. Ties
with the US will improve throughout the forecast period.
• The government will make structural improvements to the banking sector
and state-owned enterprises in 2019-23. Economic liberalisation will centre on
international trade, anchored by a handful of significant free-trade deals.
"Equitisation" (part-privatisation) will remain an important policy through the
forecast period. Progress will be slower than the CPV plans, owing to deep-
rooted structural constraints.
• Fiscal and monetary policy will together start to tighten gradually in the
initial part of the forecast period as the government reduces its wide budget
deficit and as the State Bank of Vietnam (the central bank) raises interest rates to
mitigate increasing price pressures.
• Over the next five years Vietnam will remain one of the fastest-growing
countries in the Association of South-East Asian Nations (ASEAN) region. The
economy will grow rapidly in 2019-23, with real GDP growth expected to
average 6.5% per year. The US-China bilateral trade war will accelerate the
migration of low-cost export manufacturing from China to Vietnam. This will
provide support to export revenue and foreign investment inflows in 2019-23.
• A weakening dong, growing demand-side pressures and stronger producer
price inflation will exert greater upward pressure on consumer price inflation in
2019-23 compared with the preceding five years.
• The current account will remain in surplus in 2019-23. The surplus on the
trade account will narrow in 2020 as the US economic slowdown affects world
trade growth, but there will be signs of recovery from 2021. The primary income
account and the services account will remain in deficit in 2019-23.
Key indicators 2018 2019 2020 2021 2022 2023
Real GDP growth (%) 7.1 6.9 6.2 6.1 6.4 6.8
Consumer price inflation (av; %) 3.5 3.1 3.0 3.5 3.8 3.9
Budget balance (% of GDP) -6.1 -6.0 -6.0 -5.8 -5.5 -5.2
Current-account balance (% of GDP) 1.8 1.1 0.5 0.8 1.1 1.4
Lending rate (av; %) 8.3 9.2 8.7 9.0 9.2 9.2
Exchange rate D:US$ (av) 23,012 23,048 23,234 23,609 24,361 25,051
Exchange rate D:¥100 (av) 20,838 20,919 21,296 22,511 24,249 26,075
Editors: Alice Mummery (analyst); Anwita Basu (consulting analyst) Editorial closing date: February 4th 2019
All queries: Tel: (44.20) 7576 8000 Email: london@eiu.com Next report: To request the latest schedule, email schedule@eiu.com
Country Forecast February 2019 www.eiu.com © The Economist Intelligence Unit Limited 2019
2 Vietnam
Business environment Value of indexa Global rankb Regional rankc

rankings 2014-18 2019-23 2014-18 2019-23 2014-18 2019-23
5.46 6.14 58 54 12 12
a Out of 10. b Out of 82 countries. c Out of 17 countries: Australia, Bangladesh, China, Hong Kong,
India, Indonesia, Japan, Malaysia, New Zealand, Pakistan, Philippines, Singapore, South Korea,
Sri Lanka, Taiwan, Thailand and Vietnam.
• In 2019-23 the business environment will improve, owing to better access

to financing, more favourable policies for foreign investors and lower barriers to
trade. This improves Vietnam’s global ranking to 54th for the forecast period.
Vietnam’s business environment at a glance
Policy towards private enterprise and competition
2019-20: Muted investor demand and delays over reporting standards hold back the privatisation process. However, a new
competition law (in effect from July 2019) supports investor interest.
2021-23: The Committee for State Capital Management takes greater ownership of the privatisation process, reducing the
inherent delays caused by strong vested interests in a number of ministries. Enforcement of the competition law improves.
Policy towards foreign investment

2019-20: Tax incentives for foreign investment in strategic sectors remain generous. The 49% shareholding cap on public
companies is lifted, but foreign investors still cannot hold majority stakes in sectors deemed important to national security.
2021-23: Three new special economic zones attract additional higher-value-added manufacturing operations to Vietnam.
Foreign trade and exchange controls
2019-20: The implementation of recently signed free-trade agreements with South Korea, the EU and the Eurasian Economic
Union continues. The benefits of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which came
into effect on December 31st 2018, start to be felt.
2021-23: A new customs bond system substantially reduces customs clearance times for trading firms.
Taxes
2019-20: Progress is made on improving tax collection, but inefficiencies and corruption persist. Taxes are increasingly used
as a tool of social policy, including through rises in “sin taxes” and environmental levies.
2021-23: The tax base is broadened but the system remains complicated. The corporate tax rate for small- and medium-sized
firms is gradually reduced to 15-17%, but employers’ social security contribution rates continue to rise.
Financing
2019-20: Limits on the activities of foreign banks are loosened further, helping to encourage banking sector consolidation.
2021-23: Domestic corporate credit rating services proliferate, supporting greater issuance of local corporate bonds.
The labour market
2019-20: Despite the tight labour market, wages remain competitive by regional standards. The urban-rural wage gap
widens, while shortages of skilled labour increase. A relaxation of rules on foreign labour provides some relief.
2021-23: Labour strikes and average attrition rates rise as the cost of living continues to increase.
Infrastructure
2019-20: The supply of electricity remains inadequate, resulting in frequent blackouts.
2021-23: The cargo sector and air travel grow rapidly. Modest improvements are made to Ho Chi Minh City's road networks,
and the north-south expressway between the capital, Hanoi, and Ho Chi Minh City nears completion.
Technological readiness
2019-20: Internet usage remains relatively low. Government incentives attract more foreign firms to site research-and-
development activities in Vietnam.
2021-23: Broadband speeds improve as government investment into the sector continues.
Vietnam 3
Fact sheet
Annual data 2018 a Historical averages (%) 2014-18
Population (m) 96.5 Population growth 1.1
GDP (US$ bn; market exchange rate) 240.5 Real GDP growth 6.6
GDP (US$ bn; purchasing power parity) 701.5 Real domestic demand growth 7.8
GDP per head (US$; market exchange rate) 2,493 Inflation 2.9
GDP per head (US$; purchasing power parity) 7,270 Current-account balance (% of GDP) 2.8
Exchange rate (av) D:US$ 23,012 FDI inflows (% of GDP) 6.0
a Actual.
Background: For much of its history, Vietnam has fought off domination by outside powers. In 1945 Ho Chi Minh declared
independence from France after nearly 60 years of colonial rule. Vietnam was divided between the Communist north and
the US-backed south in 1954. War between the two governments finally ended in 1975 with victory for the north.
The Vietnamese invasion of Cambodia in 1978-79 led to more than a decade of isolation from the West and dependence on
the Soviet Union. This state of affairs ended with the Cambodian settlement of 1991, which allowed Vietnam to implement
more fully the government’s policy of economic renovation (doi moi), first initiated in 1986. Vietnam’s accession to the
World Trade Organisation in 2007 marked the start of a new chapter in its engagement with the international community.
Political structure: Vietnam is one of the few countries still to be organised along traditional Leninist lines. It is a one-party
state, within which the Communist Party of Vietnam maintains a tight grip on power. Efforts are under way to make local
government more accountable and to reduce bureaucratic inefficiency and widespread corruption.
Policy issues: The government has made progress on reducing poverty, but tough challenges lie ahead, notably in terms of
the wide fiscal deficit, improving the conduct and credibility of monetary policy, and making the legal framework more
transparent. The government will continue to focus on anti-corruption efforts and liberalising the economy, while seeking to
ensure that rapid growth does not result in greater income inequality, macroeconomic imbalances and environmental
degradation. Economic reforms will improve the operating environment for investors, as will participation in bilateral and
regional trade agreements. Reform of state-owned enterprises is a priority, but rapid progress in this area will be difficult.
Taxation: The personal income tax system has a top rate of 35% for citizens and resident foreigners. Non-residents (those
who stay for fewer than 183 days) pay a flat rate of 20%. The standard corporate tax rate (applying to both local and foreign
firms) stands at 20%. Certain preferential and sector-specific rates still apply, such as for oil and gas.
Foreign trade: On a balance-of-payments basis, exports rose to US$214.1bn in 2017, while the import bill grew to
US$202.6bn. The merchandise trade account registered a surplus of US$11.5bn in 2017, down from US$14bn in 2016.
Major exports 2017 % of total Major imports 2017 % of total

Telephones & mobile phones 21.1 Electronics, computers & related parts 17.7
Textiles & garments 12.1 Machinery, equipment & tools 15.9
Computers & electronic products 12.1 Telephones, mobile phones & related parts 7.7
Footwear 6.8 Fabrics 5.3
Leading markets 2017 % of total Leading suppliers 2017 % of total

US 20.3 China 25.9
China 14.6 South Korea 20.6
Japan 8.0 Japan 7.9
South Korea 6.8 Taiwan 5.6
4 Vietnam
Outlook for 2019-23

Political outlook
Political stability The Economist Intelligence Unit expects Vietnam to remain a one-party state,
tightly controlled by the ruling Communist Party of Vietnam (CPV), throughout
the 2019-23 forecast period. Indicating the extent of the concentration of power,
in October 2018 the CPV’s general secretary, Nguyen Phu Trong, was elected to
the presidency during a meeting of the National Assembly (parliament), which
is in essence a rubber-stamp body. He had been nominated for the post by
legislators after the death of the then-president, Tran Dai Quang, in September
2018. Mr Trong is the first leader to occupy both posts since Ho Chi Minh—a fact
that signals his dominance in the politburo. The two other key positions of
power are held by the prime minister, Nguyen Xuan Phuc, and the chairwoman
of the National Assembly, Nguyen Thi Kim Ngan. The centralisation of power in
Mr Trong’s hands could increase dissent among party members, some of whom
may feel that he has acquired too much influence over policymaking.
Differences in opinion over policy and conflicting vested interests will persist
within the CPV, particularly in the early part of the forecast period. Bureaucracy
will expand, owing to the challenges of handling competing international
pressures and an increasingly vocal citizenry. Nonetheless, we believe that a
fracturing of the CPV and a breakdown of the one-party system remain highly
unlikely in 2019-23.
We expect Mr Trong to continue to prioritise his anti-corruption drive, especially
as he views the problem of widespread graft as a credible threat to the CPV’s
legitimacy. Prosecuting cases of grand corruption, as opposed to implementing
much-needed political and institutional reforms, will remain the chief focus of
the administration. Anti-corruption efforts will pose an inherent risk to the
government’s stability, especially if officials with current or past links to the
upper echelons of the CPV continue to be implicated. The high-profile
convictions that the party has used to publicise its efforts should not be viewed
as an indication of success against corruption more generally. There are a
number of structural issues—including an absence of government transparency
and a lack of public accountability—that are unlikely to be addressed as part of
this drive. This will limit progress in curbing low-level graft.
The government will continue to face public pressure over its handling of
territorial disputes with China in the South China Sea. Many Vietnamese
remain critical of the CPV’s reluctance to respond more forcefully to perceived
Chinese provocation. Large-scale protests occurred in June 2018 against draft
legislation that would have allowed investors of any nationality to lease land in
three planned special economic zones for up to 99 years. While the draft made
no direct mention of China, demonstrators were concerned that Chinese
investors could make use of the new legislation. The government subsequently
dropped the extension of the land-lease period from the current maximum of
70 years. The case highlights how the authorities will remain sensitive to public
opinion on matters relating to the preservation of domestic ownership and
national sovereignty.
Vietnam 5
Environmental issues will also have the capacity to induce outbursts of public
discontent, especially as standards set by the central government are unlikely to
be applied evenly across the country. Other social tensions will come to the
fore in 2019-23 as more Vietnamese begin to call on the state to adhere to
international norms of civil, political and labour rights.
Despite a willingness by the government to adjust policy in order to placate
protesters, high-profile critics of the CPV will continue to find it difficult to
express their opinions freely. Changes to the penal code in 2017 impose much
harsher penalties on those who speak out against the regime. Another factor is
foreign governments’ relative lack of interest in human rights violations in
Vietnam. Over the forecast period the authorities will continue to clamp down
on high-profile dissident activity and tighten avenues for the expression of
discontent. This is among the aims of new cybersecurity legislation, which
came into effect on January 1st 2019. The law requires foreign companies
providing internet or telecommunications services to remove within 24 hours
content that the government deems inappropriate.
Election watch The next election for the National Assembly is due by mid-2021. However,
meaningful ballots do not exist in Vietnam, as candidates are vetted by the
Vietnam Fatherland Front, a CPV-controlled body. Appointments to the top
political posts will continue to take place behind closed doors at party
congresses, which are held every five years.
International relations Vietnam’s relations with China will remain prone to setbacks resulting from the
countries’ long-standing territorial disputes in the South China Sea, which are
unlikely to be resolved in 2019-23. China’s more aggressive moves to militarise
the contested islands it controls and its hardline stance on Vietnam’s territorial
claims will continue to strain relations, even as both sides show a commitment
to resolving these disputes peacefully through dialogue. Bilateral relations will
be characterised by an underlying mistrust. In a manifestation of this wariness,
Vietnam continues to enhance its maritime defence capabilities (with the aid of
a number of countries), while bolstering its facilities in the South China Sea.
Vietnam will remain wary of pushing China too forcefully, however, owing to
its economy’s extensive links with that of its neighbour.
With the aim of reducing its exposure to China, Vietnam will maintain an
omnidirectional foreign policy. The strategic port at Cam Ranh Bay allows
Vietnam to better accommodate foreign naval forces, bolstering government
efforts to internationalise disputes in the South China Sea. Vietnam will
continue to forge stronger security ties with regional powers that have their
own territorial spats with China, such as India and Japan. It will also continue
to argue that disputes over the South China Sea should not be handled on a
bilateral basis—a format under which China would hold all the leverage.
The government will remain keen to deepen ties with the US. This has been
more challenging under the administration of the US president, Donald Trump.
However, a number of high-level US officials have paid visits during
Mr Trump's presidency, signalling that the US values Vietnam as a political and
economic partner. There is growing speculation that Vietnam will host the
6 Vietnam
second summit between North Korea and the US in late February. During his
visit to Vietnam in July 2018 the US secretary of state, Mike Pompeo, said that
Vietnam provided a positive example of how North Korea's economy could
evolve and how the relationship between North Korea and the US could move
from being foes to friendship. We expect that Vietnamese-US relations will
continue to deepen over the forecast period, particularly as Vietnam is well-
positioned to play a counterbalancing role to China in the region.
Economic policy outlook

Policy trends Mr Trong will oversee a period of continued economic liberalisation, anchored
by several international trade deals. The implementation of the Association of
South-East Asian Nations (ASEAN) Economic Community and several ASEAN-
led bilateral deals, as well as the free-trade agreements (FTAs) that Vietnam has
signed with South Korea and the EU, will take place in 2019-23 and beyond.
In addition, Vietnam is among the 11 countries that will benefit from the
Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which
came into effect on December 30th 2018. At the latest World Economic Forum
on ASEAN, which took place in Vietnam in September 2018, ASEAN leaders
also signalled a strong commitment to the Regional Comprehensive Economic
Partnership (RCEP), which will harmonise ASEAN’s bilateral agreements with
six of its major economic partners. Nonetheless, areas of concern persist among
ASEAN’s partners (notably India), and we do not expect an RCEP deal to be
agreed within the next five years.
Vietnam’s economic liberalisation will also entail the continued “equitisation”
(part-privatisation) of state-owned enterprises (SOEs). The success of some
recent initial public offerings (IPOs), in addition to new initiatives such as
Decree 126 and the Committee for State Capital Management (CSCM),
underline the government’s greater resolve on this matter. (Decree 126 has
eased restrictions on strategic investors who want to buy at least 10% of a firm.)
The CSCM should help the government to consolidate control over assets in
firms managed by different ministries, where vested interests have often
contributed to delays in equitisation plans.
The government stated in October 2018 that it was planning to remove the 49%
foreign-shareholding cap on public companies. Under the proposal, foreign
investors would be able to take a majority stake. However, restrictions will still
apply to industries that the government deems important to national security,
giving it veto power over management decisions. The prime minister, Mr Phuc,
reiterated the government's commitment to privatisation in a speech on
January 1st 2019. The 2016-20 five-year plan aims to reduce the number of SOEs
583 in 2016 to 103. Despite positive moves by the government in recent years,
deep-rooted structural issues will prevent the government’s ambitious
equitisation targets from being fulfilled.
Ridding the banking sector of bad debts will remain a priority, and the National
Assembly’s Resolution 42, which came into effect in August 2017, has expedited
the process. We anticipate that Resolution 42—which allows banks to liquidate
pledged assets if the borrower is not co-operating—will continue to have a
positive impact on this front. The legislation will also aid banking sector
Vietnam 7
consolidation, as healthier balance sheets give larger lenders the capability to

acquire smaller banks. The authorities have discussed a plan to raise the 30%
foreign-ownership cap on banks; however, we expect that the cap will be raised
only on a case-by-case basis.
Fiscal policy We expect fiscal consolidation to continue, with the deficit forecast to narrow to
the equivalent of 5.2% of GDP by 2023, from an estimated 6.1% of GDP in 2018.
Fiscal consolidation in 2019-23 will take place on the back of brisk nominal GDP
growth, robust consumption growth (indirect taxes contribute the most to the
public coffers), SOE reform and a push towards leaner government in terms of
staffing levels. Tax reform is firmly on the agenda, as we expect the government
to seek to secure additional revenue streams in 2019-23. For example, the
administration has indicated that it may raise the maximum rate of value-
added tax (VAT) to 12-14%, from 10% at present. However, we believe that an
upward adjustment to VAT will be implemented only in the latter part of our
forecast period, as it would be politically unpopular.
Monetary policy We expect the State Bank of Vietnam (SBV, the central bank) to raise its main
policy interest rate (the benchmark refinancing rate) gradually in 2019-23, from
6.25% at present. The rate rise will be largely aimed at tempering consumer
price inflation, which will come in at the upper end of the SBV’s ceiling target
of 4%. However, any tightening is unlikely to be very aggressive as the
authorities target credit growth of 14% this year. (The authorities have
previously allowed higher credit growth to help to reach the government's
growth targets.) As a result, the SBV will also take account of the government’s
medium-term growth targets of 6.5-7% per year when setting monetary policy.
Moreover, we expect a brief period of monetary policy easing in 2020, when
Vietnam’s export growth prospects are set to be marred by short-lived
economic weakness in the US.
Economic forecast
Economic growth Real GDP grew by 7.1% in 2018, up from 6.8% in 2017. As has been the case in
recent years, the export-orientated manufacturing and processing sectors were
the star performers. We forecast annual average real GDP growth of 6.5% in
2019-20 as the country feels the impact of a weaker global outlook.
Nonetheless, Vietnam will remain one of the fastest-growing economies in the
ASEAN region, and we expect it to be one of the main countries in the region to
benefit from the disruption to global supply chains caused by the US-China
trade war. The country had already enjoyed a strong reputation as a low-cost
alternative to China for export-orientated manufacturing. The trade war (which
we expect to last for several years) will accelerate the shift of such production to
Vietnam, driving faster growth in both investment by multinationals and
exports. These positive effects will be felt more in the initial part of our forecast
period. In particular, we expect gross fixed investment to be further boosted by
government-funded construction of the new infrastructure that will be needed
to support the surge in exports. We forecast annual average real GDP growth of
6.5% in 2019-23.
8 Vietnam
Domestic demand growth will remain robust in the next few years, helped by
rapid wage growth, a jobs boom in the tourism sector and constructive
government policies to encourage private-sector investment. The latter will be
supported by Vietnam’s participation in several major FTAs, which we expect
to encourage stronger inflows of foreign direct investment. Despite this,
however, domestic demand growth in 2019-23, at a forecast average of 6.6% per
year, will be more moderate than the estimated average rate of 7.8% in 2014-18.
Amid more persistent price pressures, a gradual tightening of monetary policy
and fiscal consolidation will hold back the pace of domestic expansion to some
extent.
Inflation Lower global oil prices in 2019 and 2020 will help to ease pressure on annual
average consumer prices in Vietnam in the initial part of the forecast period. We
forecast that Brent blend oil will average US$66/barrel in 2019, down by 7.1%
from 2018 levels. However, this will be partially offset by the feedthrough
effects of delayed environmental taxes introduced on January 1st 2019. The
authorities had postponed the introduction in mid-2018 as price growth surged.
Inflationary pressures eased through the second half of 2018, owing in part to
government measures to slow the pace of price growth. We forecast annual
average inflation of 3.1% in 2019 as the effects of the tax increases start to fade.
In 2019-23 inflation will be faster than in the past five years, averaging 3.5% in
annual terms. Crucially, Vietnam’s economy is heavily dependent on imports,
which means that the pass-through effect of currency depreciation on local
inflation is strong. Some of these pressures will be offset by the SBV’s gradual
tightening of monetary policy.
Exchange rates The sharper depreciation of the Chinese renminbi against the US dollar in 2018
put pressure on the dong, as China is Vietnam's most important trading partner.
The dong depreciated by 0.4% against the US dollar in real terms in 2018. The
dong will face depreciatory pressures against the US dollar in 2019, linked to the
continued strengthening of the US dollar against emerging-market currencies,
Vietnam’s narrowing interest-rate differential with the US and an increase in
global trade tensions. The SBV’s gradual tightening of monetary policy from this
year will help to mitigate some of this impact. We expect the SBV to be
successful in building reserves in the years ahead, helped by strong export
revenue.
External sector We expect the current account to remain in surplus in 2019-23. Throughout the
forecast period Vietnam will run a trade surplus, as it will continue to benefit
from the relocation of production as costs rise in China; the US-China trade war
will accelerate this trend. Meanwhile, the deficit on the services account will
remain relatively narrow and stable, owing to the strong expansion of the
domestic tourism industry. We continue to expect that Vietnam will run a
sizeable deficit on the primary income account, in line with higher borrowing
rates as a result of the expected modest increase in US interest rates for much of
the forecast period.
Vietnam 9
Data summary
Global outlook
2014 a 2015 a 2016 a 2017 a 2018 b 2019 c 2020 c 2021 c 2022 c 2023 c
International assumptions (%)
World GDP growth 2.8 2.8 2.4 3.1 3.0 2.8 2.5 2.9 2.9 2.9
US GDP growth 2.5 2.9 1.6 2.2 2.9 2.3 1.3 1.7 2.0 1.8
EU28 GDP growth 1.8 2.2 2.0 2.6 1.9 1.6 1.6 1.8 1.9 1.7
Asia & Australasia growth 4.4 4.6 4.4 4.8 4.6 4.5 4.2 4.3 4.3 4.1
World trade growth 3.1 2.2 2.3 5.3 4.3 3.4 2.8 4.0 3.7 3.9
US CPI 1.6 0.1 1.3 2.1 2.6 2.4 1.6 1.8 1.7 1.8
EU28 CPI 0.5 0.0 0.3 1.7 1.9 1.9 1.8 1.9 2.0 1.9
Manufactures export price -0.1 -4.5 -2.2 1.9 6.2 3.7 2.8 2.6 3.7 3.0
Oil price (Brent; US$/b) 98.9 52.4 44.0 54.4 71.1 66.0 60.5 69.8 75.6 75.0
US$ 3-month commercial paper rate 0.1 0.2 0.5 1.1 2.1 2.9 2.3 2.3 2.8 3.2
¥:US$ (av) 105.9 121.0 108.8 112.1 110.4 110.2 109.1 104.9 100.5 96.1
¥:€ (av) 140.7 134.3 120.4 126.6 130.5 131.4 133.1 127.2 124.3 118.9
a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence Unit forecasts.
Gross domestic product, at current market prices

2014 a 2015 a 2016 a 2017 a 2018 b 2019 c 2020 c 2021 c 2022 c 2023 c
Expenditure on GDP (D trn at current market prices)
GDP 3,937.9 4,192.9 4,502.7 5,006.0 5,535.3 6,013.0 6,573.1 7,302.2 8,103.2 9,077.4
Private consumption 2,591.3 2,849.5 3,086.3 3,405.8 3,736.1 4,064.9 4,414.5 4,802.9 5,254.4 5,764.1
Government consumption 246.7 265.5 293.1 325.8 359.6 394.9 433.2 477.5 526.7 580.8
Gross fixed investment 938.5 1,033.8 1,066.2 1,190.5 1,339.8 1,524.4 1,728.0 1,971.8 2,248.0 2,562.8
Exports of goods & services 3,402.5 3,764.3 4,215.6 4,879.8 b 5,434.6 5,924.2 6,224.1 6,788.1 7,601.7 8,001.2
Imports of goods & services 3,273.5 3,731.2 4,100.3 5,004.0 b 5,691.0 6,052.7 6,392.4 6,914.6 7,715.5 8,019.3
Stockbuilding 118.2 126.7 130.6 140.2 148.5 157.4 165.6 176.4 187.9 187.9
Domestic demand 3,894.7 4,275.5 4,576.1 5,062.2 5,584.0 6,141.5 6,741.3 7,428.7 8,217.0 9,095.5
Expenditure on GDP (US$ bn at current market prices)
GDP 185.8 191.4 201.4 220.5 240.5 260.9 282.9 309.3 332.6 362.4
Private consumption 122.3 130.1 138.1 150.0 162.4 176.4 190.0 203.4 215.7 230.1
Gross fixed investment 44.3 47.2 47.7 52.4 58.2 66.1 74.4 83.5 92.3 102.3
Exports of goods & services 160.6 171.8 188.6 214.9 b 236.2 257.0 267.9 287.5 312.0 319.4
Imports of goods & services 154.5 170.3 183.4 220.4 b 247.3 262.6 275.1 292.9 316.7 320.1
Stockbuilding 5.6 5.8 5.8 6.2 6.5 6.8 7.1 7.5 7.7 7.5
Domestic demand 183.8 195.2 204.7 223.0 242.7 266.5 290.1 314.7 337.3 363.1
Economic structure (% of GDP at current market prices)
Memorandum items
Oil production ('000 b/d) 356.0 380.0 328.0 297.0 292.0 289.5 287.5 286.5 285.5 284.5
National savings ratio (%) 31.9 28.2 30.7 29.4 28.7 29.1 29.3 30.2 31.1 31.7
10 Vietnam
Gross domestic product, at constant prices

2014 a 2015 a 2016 a 2017 a 2018 b 2019 c 2020 c 2021 c 2022 c 2023 c
Real expenditure on GDP (D trn at constant 2010 market prices)
GDPd 2,695.8 2,875.9 3,054.5 3,262.5 3,493.4 3,733.2 3,964.7 4,205.5 4,475.6 4,778.0
Private consumption 1,750.2 1,913.5 2,053.2 2,204.1 2,335.3 2,464.2 2,598.0 2,730.8 2,879.2 3,039.3
Gross fixed investment 761.1 832.2 914.8 1,008.1 1,086.7 1,188.9 1,295.9 1,416.4 1,546.7 1,689.0
Exports of goods & services 2,607.9 2,937.6 3,344.9 3,639.4 b 3,937.1 4,216.3 4,488.2 4,801.3 5,192.8 5,618.7
Imports of goods & services 2,602.0 3,073.3 3,543.1 3,929.8 b 4,199.3 4,488.9 4,791.9 5,141.6 5,566.7 6,010.3
Domestic demand 2,764.2 3,015.6 3,258.4 3,522.6 3,753.5 4,005.8 4,268.4 4,545.8 4,849.6 5,169.6
Real expenditure on GDP (% change)
GDP 6.0 6.7 6.2 6.8 7.1 a 6.9 6.2 6.1 6.4 6.8
Domestic demand 7.0 9.1 8.0 8.1 6.6 6.7 6.6 6.5 6.7 6.6
Real contribution to GDP growth (% points)
External balance -1.0 -5.3 -2.2 -3.0 b 0.9 -0.3 -0.8 -0.9 -0.8 -0.4
a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence Unit forecasts. d Components of GDP may not sum to total because of
statistical discrepancy.
Gross domestic product by sector of origin

2014 a 2015 a 2016 a 2017 a 2018 a 2019 b 2020 b 2021 b 2022 b 2023 b
Origin of GDP (D trn at constant 2010 prices)
GDP at factor cost 2,383.4 2,546.2 2,703.8 2,889.6 3,097.8 3,310.4 3,515.7 3,729.2 3,968.8 4,236.9
Agriculture 451.7 462.5 468.8 482.4 500.6 514.3 527.7 542.5 557.1 571.6
Industry 896.0 982.4 1,056.8 1,141.4 1,242.4 1,334.4 1,414.4 1,504.9 1,604.3 1,708.5
Services 1,035.7 1,101.2 1,178.1 1,265.8 1,354.8 1,461.8 1,573.6 1,681.8 1,807.4 1,956.7
Origin of GDP (real % change)
Agriculture 3.4 2.4 1.4 2.9 3.8 2.8 2.6 2.8 2.7 2.6
Industry 6.4 9.6 7.6 8.0 8.9 7.4 6.0 6.4 6.6 6.5
Services 6.2 6.3 7.0 7.4 7.0 7.9 7.7 6.9 7.5 8.3
Origin of GDP (% of factor cost GDP)
Agriculture 17.7 17.0 16.3 15.3 14.6 c 14.0 13.5 13.1 12.7 12.2
Industry 33.2 33.3 32.7 33.4 34.3 c 34.4 34.4 34.5 34.5 34.5
Services 39.0 39.7 40.9 41.3 41.2 c 41.5 41.9 42.2 42.5 43.0
Memorandum item
Industrial production (% change) 23.6 17.6 9.3 24.0 10.9 c 9.2 8.9 9.2 9.5 9.8
a Actual. b Economist Intelligence Unit forecasts. c Economist Intelligence Unit estimates.
Vietnam 11
Growth and productivity

2014 a 2015 a 2016 a 2017 a 2018 a 2019 b 2020 b 2021 b 2022 b 2023 b
Growth and productivity (%)
Labour productivity growth 4.9 6.5 5.3 6.0 6.2 6.2 5.5 5.6 5.9 6.1
Total factor productivity growth 2.8 4.0 2.9 3.5 3.7 3.6 2.8 2.8 3.1 3.3
Growth of capital stock 7.1 7.4 7.7 8.1 8.0 8.2 8.3 8.5 8.6 8.7
Growth of potential GDP 6.4 7.2 6.1 7.0 7.2 6.8 6.1 6.2 6.4 6.6
Growth of real GDP 6.0 c 6.7 c 6.2 c 6.8 c 7.1 c 6.9 6.2 6.1 6.4 6.8
Growth of real GDP per head 4.8 c 5.5 c 5.1 c 5.7 c 6.0 5.8 5.2 5.1 5.5 5.8
a Economist Intelligence Unit estimates. b Economist Intelligence Unit forecasts. c Actual.
Economic structure, income and market size

2014 a 2015 a 2016 a 2017 a 2018 b 2019 c 2020 c 2021 c 2022 c 2023 c
Population, income and market size
Population (m) 92.5 93.6 94.6 95.5 96.5 97.4 98.4 99.3 100.2 101.1
GDP (US$ bn at market exchange
rates) 185.8 191.4 201.4 220.5 240.5 260.9 282.9 309.3 332.6 362.4
GDP per head (US$ at market
exchange rates) 2,010 2,050 2,130 2,310 2,490 2,680 2,880 3,120 3,320 3,580
Private consumption (US$ bn) 122.3 130.1 138.1 150.0 162.4 176.4 190.0 203.4 215.7 230.1
Private consumption per head (US$) 1,320 1,390 1,460 1,570 1,680 1,810 1,930 2,050 2,150 2,280
GDP (US$ bn at purchasing power
parity) 513.3 553.5 595.4 647.4 701.5 762.4 829.9 894.4 959.5 1,034.5
GDP per head (US$ at purchasing
power parity) 5,550 5,920 6,300 6,780 7,270 7,830 8,440 9,010 9,580 10,230
Personal disposable income (D trn) 2,978.5 b 3,275.3 b 3,547.5 b 3,914.7 b 4,196.3 4,812.6 5,244.1 5,594.2 5,970.2 6,649.1
Personal disposable income
(US$ bn) 140.6 b 149.5 b 158.7 b 172.4 b 182.4 208.8 225.7 237.0 245.1 265.4
Growth of real disposable income
(%) 6.1 b 9.3 b 7.3 b 7.4 b 3.5 11.2 5.8 3.1 2.9 7.2
Memorandum items
Share of world population (%) 1.27 1.27 1.27 1.27 1.28 1.28 1.28 1.28 1.28 1.29
Share of world GDP (% at market
exchange rates) 0.24 0.26 0.27 0.28 0.29 0.30 0.31 0.32 0.33 0.34
Share of world GDP (% at purchasing
power parity) 0.47 0.48 0.50 0.51 0.53 0.55 0.56 0.59 0.61 0.63
Share of world exports of goods (%) 0.81 1.01 1.13 1.24 1.26 1.26 1.25 1.30 1.35 1.31
Fiscal indicators
2014 a 2015 a 2016 a 2017 a 2018 b 2019 c 2020 c 2021 c 2022 c 2023 c
Fiscal indicators (% of GDP)
Government expenditure 35.0 37.1 30.2 31.5 30.7 30.1 29.8 29.1 28.5 28.3
Government revenue 28.7 30.8 24.6 24.8 24.7 24.1 23.8 23.3 23.0 23.1
Budget balance -6.3 -6.3 -5.6 -6.7 -6.1 -6.0 -6.0 -5.8 -5.5 -5.2
Government debt 57.1 60.1 62.8 63.2 62.4 62.0 61.0 60.8 60.3 59.0
12 Vietnam
Monetary indicators
2014 a 2015 a 2016 a 2017 a 2018 b 2019 c 2020 c 2021 c 2022 c 2023 c
Monetary indicators
Exchange rate D:US$ (av) 21,189 21,909 22,355 22,705 23,012 a 23,048 23,234 23,609 24,361 25,051
Exchange rate D:US$ (year-end) 21,373 22,485 22,740 22,690 23,180 a 23,141 23,421 23,985 24,706 25,396
Exchange rate D:¥100 (av) 20,017 18,103 20,555 20,248 20,838 20,919 21,296 22,511 24,249 26,075
Exchange rate D:¥100 (year-end) 17,833 18,695 19,473 20,135 21,130 21,028 21,787 23,400 25,340 26,372
Real effective exchange rate (av),
CPI-based 124.8 b 132.5 b 132.4 b 132.6 b 130.4 132.8 131.4 130.3 126.8 124.6
Real effective exchange rate (av),
PPI-based 105.4 b 114.5 b 109.5 b 108.2 b 105.4 107.2 105.1 103.7 100.2 97.6
Purchasing power parity D:US$ (av) 7,672 7,575 7,563 7,733 7,891 7,887 7,920 8,164 8,446 8,775
Money supply (M2) growth (%) 19.7 14.9 17.9 14.3 11.9 13.7 13.6 13.3 13.9 13.7
Domestic credit growth (%) 15.5 20.1 17.2 12.6 12.0 11.8 12.1 12.5 12.8 13.3
Commercial banks' prime rate
(av; %) 8.7 7.1 7.0 7.1 8.3 9.2 8.7 9.0 9.2 9.2
Deposit rate (av; %) 5.8 4.7 5.0 4.8 4.7 5.4 5.3 5.3 5.5 5.7
Money market rate (av; %) 4.5 4.7 4.5 4.3 3.9 4.9 4.6 4.8 4.9 5.1
Employment, wages and prices

2014 a 2015 a 2016 a 2017 a 2018 b 2019 c 2020 c 2021 c 2022 c 2023 c
The labour market
Labour force (m) 55.9 56.5 56.9 57.5 58.0 58.3 58.6 58.9 59.2 59.4
Labour force (% change) 1.7 1.1 0.7 1.1 0.9 0.5 0.5 0.6 0.5 0.3
Price inflation (%)
Consumer prices (av) 4.1 0.6 2.7 3.5 3.5 a 3.1 3.0 3.5 3.8 3.9
Consumer prices (year-end) 1.8 0.6 4.7 2.6 3.0 a 3.2 3.3 3.5 4.0 3.8
GDP deflator (av) 3.7 -0.2 1.1 4.1 3.3 1.7 2.9 4.7 4.3 4.9
Private consumption deflator (av) 4.1 0.6 0.9 2.8 b 3.5 3.1 3.0 3.5 3.8 3.9
Government consumption deflator
(av) 4.5 0.6 2.6 3.6 b 3.5 3.1 3.0 3.5 3.8 3.9
Fixed investment deflator (av) 1.4 0.7 -6.2 1.3 b 4.4 4.0 4.0 4.4 4.4 4.4
Vietnam 13
Current account and terms of trade

2014 a 2015 a 2016 a 2017 a 2018 b 2019 c 2020 c 2021 c 2022 c 2023 c
Current account (US$ bn)
Current-account balance 9.4 0.9 8.2 6.1 4.4 3.0 1.4 2.5 3.5 5.0
Current-account balance (% of GDP) 5.0 0.5 4.1 2.8 1.8 1.1 0.5 0.8 1.1 1.4
Goods: exports fob 150.2 162.1 176.6 214.1 240.7 253.5 261.0 286.8 313.1 321.0
Goods: imports fob -138.1 -154.7 -162.6 -202.6 -230.5 -245.2 -253.7 -278.3 -303.2 -309.6
Trade balance 12.1 7.4 14.0 11.5 10.2 8.3 7.3 8.4 9.9 11.4
Services: credit 11.0 11.2 12.3 13.1 13.9 14.9 15.6 16.3 17.1 18.1
Services: debit -14.5 -15.5 -17.7 -17.0 -17.7 -17.7 -18.5 -18.8 -19.3 -19.7
Services balance -3.5 -4.3 -5.4 -3.9 -3.8 -2.8 -2.9 -2.5 -2.3 -1.6
Primary income: credit 0.3 0.4 0.6 0.7 1.0 1.2 1.3 1.3 1.6 1.7
Primary income: debit -9.2 -10.3 -8.9 -10.6 -11.6 -12.7 -13.7 -14.5 -15.8 -16.9
Primary income balance -8.8 -9.9 -8.4 -9.9 -10.6 -11.5 -12.3 -13.2 -14.2 -15.2
Secondary income balance 9.6 7.7 8.0 8.4 8.7 9.0 9.4 9.8 10.0 10.4
Terms of trade
Export price index (US$-based;
2010=100) 106.0 98.6 95.0 100.1 101.5 102.8 99.5 99.5 99.7 92.9
Export prices (% change) 0.3 -6.9 -3.7 5.4 1.4 1.3 -3.2 -0.1 0.3 -6.8
Import price index (US$-based;
2010=100) 104.5 95.2 88.3 96.1 101.2 99.9 97.5 96.3 96.0 89.1
Import prices (% change) -1.9 -8.9 -7.2 8.8 5.4 -1.3 -2.5 -1.2 -0.3 -7.2
Terms of trade (2010=100) 101.4 103.6 107.6 104.3 100.3 102.9 102.1 103.3 103.9 104.4
Memorandum item
Export market growth (%) 3.2 b 2.3 b 2.0 b 6.0 b 4.4 2.9 2.6 3.9 4.3 4.3
Foreign direct investment

2014 a 2015 a 2016 a 2017 a 2018 b 2019 c 2020 c 2021 c 2022 c 2023 c
Foreign direct investment (US$ bn)
Inward direct investment 9.20 11.80 12.60 14.10 15.00 16.76 16.61 19.48 21.39 21.39
Inward direct investment (% of GDP) 5.0 6.2 6.3 6.4 6.2 6.4 5.9 6.3 6.4 5.9
Inward direct investment
(% of gross fixed investment) 20.8 25.0 26.4 26.9 25.8 25.3 22.3 23.3 23.2 20.9
Net foreign direct investment 8.05 10.70 11.60 13.56 13.90 15.76 15.41 18.48 20.49 20.49
Stock of inward direct investment 91.0 102.8 115.4 129.5 144.5 161.3 177.9 197.3 218.7 240.1
Stock of inward direct investment
per head (US$) 983.2 1098.5 1220.2 1355.3 1497.5 1655.1 1808.3 1987.7 2183.1 2375.5
Stock of inward direct investment
(% of GDP) 49.0 53.7 57.3 58.7 60.1 61.8 62.9 63.8 65.8 66.3
Memorandum items
Share of world inward direct
investment flows (%) 0.48 0.38 0.50 0.83 1.01 0.77 0.74 0.84 0.88 0.85
Share of world inward direct
investment stock (%) 0.37 0.39 0.41 0.43 0.45 0.47 0.51 0.54 0.58 0.61
14 Vietnam
External debt
2014 a 2015 a 2016 a 2017 a 2018 b 2019 c 2020 c 2021 c 2022 c 2023 c
External debt
Total external debt (US$ bn) 72.4 77.8 85.6 104.1 114.7 120.3 121.0 127.1 134.6 140.2
Total external debt (% of GDP) 39.0 40.7 42.5 47.2 47.7 46.1 42.8 41.1 40.5 38.7
Debt/exports ratio (%) 41.7 41.6 42.5 43.1 42.5 42.3 41.2 39.6 38.6 39.1
Debt-service ratio, paid (%) 3.9 3.5 3.6 5.6 3.8 4.2 4.6 4.4 4.3 4.5
Data sources and definitions

The sources for global and domestic date refer to historical data. The source for all
forecast data, unless otherwise stated, is The Economist Intelligence Unit
Global data
US & OECD GDP growth: OECD
World trade growth: Economist Intelligence Unit aggregate
US and OECD inflation: OECD
Oil prices: dated Brent Blend
Domestic data
GDP data: GSO, Statistical Yearbook
GDP by expenditure: Economist Intelligence Unit estimates, based on current-price
data from the GSO. Components do not sum, owing to statistical discrepancy
Data for the expenditure components of GDP are available in current prices only.
We have deflated these data to derive estimates for changes in the components
of GDP in real terms, consistent with the published data for the overall rate of
GDP growth. These estimates are therefore subject to a wide margin of error
US$ GDP: GSO, converted from current prices at annual average exchange rates
Foreign direct investment: IMF, IFS; UNCTAD, World Investment Report
Population and growth: GSO
GDP per head: US$ GDP divided by population
Inflation: IMF, IFS
Exchange rates: IMF, IFS
Money supply: IMF, IFS
Balance of payments: IMF, IFS
External debt: World Bank, International Debt Statistics
Debt-service ratio: total debt service as a proportion of earnings from exports of
goods and services
Abbreviations
GSO: General Statistics Office
IFS: International Financial Statistics

2019 02 20 EIU Vietnam Country Forecast Feb 2018

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Country Forecast

Symbols for tables

Country forecast overview

Business environment Value of indexa Global rankb Regional rankc

• In 2019-23 the business environment will improve, owing to better access

Policy towards foreign investment

Major exports 2017 % of total Major imports 2017 % of total

Leading markets 2017 % of total Leading suppliers 2017 % of total

Outlook for 2019-23

Economic policy outlook

consolidation, as healthier balance sheets give larger lenders the capability to

Gross domestic product, at current market prices

Gross domestic product, at constant prices

Gross domestic product by sector of origin

Growth and productivity

Economic structure, income and market size

Employment, wages and prices

Current account and terms of trade

Foreign direct investment

Data sources and definitions

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