Macroeconomic Forecast Vietnam

BMI View: We have revised down our 2008 real GDP growth forecast from 7.0% to 5.5% as the effects of the tightening of fiscal and monetary policy cut into economic growth. The 525bps cumulative hike in interest rates in May and June should see y-o-y inflation starting to fall in H208, but the increase of up to 36% in regulated fuel prices implemented on July 21 brings upside risks to this outlook. We believe the government and the State Bank of Vietnam will have to maintain firm fiscal and monetary regimes well into next year, and have consequently revised down our real GDP growth forecast for 2009 from 7.5 to 7.0%.

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