They reiterate their call for the State Bank of Vietnam (SBV) to remain on hold despite persistent weakness in domestic demand. The Vietnam data dump for September revealed that the trend of sluggish activity amid easing inflation pressure has continued: Vietnam’s CPI inflation declined in September in line with ANZ’s forecast while retail sales remained muted. External trade posted a deficit, in line with expectations. We reiterate our call for the SBV to keep its benchmark refinancing rate at 7.00% through 2014.Vietnam’s GDP grew 5.14% ytd y/y (Q3: 5.5% y/y), broadly in line with expectations of 5.1% ytd y/y (ANZ: 5.0%). This year’s expansion remains marginally higher than the 4.73% print over the same period last year.

  • Services, accounting for more than 40% of total activity, led growth with 6.25% ytd y/y, up from 6.0% over the same period in 2012.
  • Construction growth is up 5.2% ytd y/y, versus 4.4% over the same period in 2012.
  • Agricultural sector expanded 2.39% ytd y/y, down from 2.5% over the same period in 2012.

They expect the weakness in domestic demand to persist through 2014, with some signs of improvement along the way.

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