Macroeconomic Forecast Vietnam

BMI View: We have revised down our 2008 real GDP growth forecast from 7.0% to 5.5% on account of the likely effects of the government's tightening of fiscal and monetary policy in order to curb inflationary pressures and reduce the ballooning trade deficit. The 525bps cumulative hike in interest rates in May and June should see y-o-y inflation starting to fall in Q308, but the government's wavering about the need to maintain a tight monetary policy brings upside risks to both inflation and GDP growth. We believe the government and central bank will have to maintain a tight monetary policy until next year, and have revised down our real GDP growth forecast for 2009 from 7.5% to 7.0%.

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