Asia Regional Integration Center

Growth rose from 6.2% in 2016 to 6.8% in 2017, reaching its highest rate since before the global financial crisis of 2008–2009. A sharp rise in exports, solid increase in investment, and robust private consumption underpinned growth last year. Recovery in global trade, particularly in electronics, boosted merchandise exports by a whopping 21.2%, measured in dollar value. High growth in domestic investment with contributions from high FDI and rapid credit growth boosted aggregate demand. As the consumer confidence index rose to a high 117, private consumption increased by 7.4%, more than offsetting slight moderation in public consumption caused by continued fiscal consolidation. Reflecting buoyant private consumption, retail sales grew by 10.9% in 2017 to a record $129.6 billion, equal to 58.6% of GDP.

GDP growth is expected to rise to 7.1% in 2018 before settling to 6.8% in 2019. Growth will be driven by rapid export expansion, higher domestic consumption, strong investment fueled by FDI, and strengthening agriculture. Robust private consumption is expected to be supported by rising incomes and stable inflation. Prospects for private investment remain positive. Business sentiment is buoyant, as indicated in December 2017 by upbeat business survey results and in February 2018 by the Nikkei purchasing managers’ index. Private investment is expected to benefit from Viet Nam having risen 14 places in the World Bank’s Doing Business rankings for 2018.