Economic Analysis - Manufacturing Sector Poised For Sustained High Growth - SEPT 2017

BMI View: The Vietnamese economy grew by 6.2% y-o-y in real terms in Q217, marking an acceleration from the revised growth figure of 5.2% in Q117. We remain constructive on the country's medium-term growth outlook (particularly the manufacturing sector), forecasting real GDP growth to come in at 6.2% in 2017 and 6.4% in 2018, supported by a stable political environment, growing reform momentum, an improving business environment, and strong government initiatives to boost the tourism sector.

Vietnam posted real GDP growth of 6.2% y-o-y in Q217, up from a revised growth figure of 5.2% recorded in Q117. The growth acceleration was in line with our expectations, and brought the cumulative growth rate in H117 to 5.7% y-o-y. Although the mining sector acted as a drag on the headline GDP figure in H117, overall growth was buoyed by robust expansion in the manufacturing and construction sectors, as well as a steady services sector. Over the medium term, we maintain a constructive outlook on the Vietnamese economy, expecting the manufacturing sector in particular to benefit from multinationals relocating away from China in search of lower production costs, increasing openness to trade and investment, continued political stability and growing reform momentum, as well as a booming tourism sector. This informs our forecast for Vietnam's real GDP growth to come in at 6.2% in 2017, similar to the growth pace seen in 2016, before accelerating to 6.4% in 2018.

Stable Political Environment And Reforms Positive For Investor Confidence

Expecting Growth To Average Above 6% Over The Coming Years
Vietnam - Real GDP Growth, %
General Statistics Office/Asian Development Bank

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