ANZ hold onto our expectation for the State Bank of Vietnam (SBV) to leave its policy rate unchanged for the foreseeable future as the Vietnam data dump for October reveals some progress in activity.

  • Foreign direct investment (FDI) jumped 95.8% ytd y/y, and is likely to further support export manufacturing.
  • Retail sales posted 12.58% ytd growth as trade-related sales continue to rise.
  • Inflation came in lower than expected, posting a second straight month of decline.
  • External trade posted a narrow deficit, though it remains structurally different from the trade deficits in 2010.

We see upside risk to our 2013 GDP growth forecast of 5.1% as we expect domestic demand to show some signs of improvement through the end of the year. However, the structural problems due to high non-performing loans in the banking sector are likely to keep growth below potential.

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