Vietnam Needs to Watch out China Slowdown, Vietcombank Securities Warns

Tuan Minh

09:40 20/10/2015

BizLIVE - The Vietnamese government needs to closely monitor risks from the Chinese economic slowdown throughout this year-end as well as in 2016, Vietcombank Securities Company has warned.

Vietnam Needs to Watch out China Slowdown, Vietcombank Securities Warns

A street vendor pushes a bicycle loaded with goods in a street in Hanoi, Vietnam. (Photo:

Nikkei Vietnam Manufacturing PMI weakened to 49.5 in September, following readings of 51.3 in August and 52.6 in July, bringing an end to a two-year sequence of improvement of the manufacturing sector. New orders decreased for the first time in just over a year in September. Meanwhile, new export orders fell for the fourth successive month, and at the second-fastest pace in the series history.
“We believe that China’s slowing economy is exerting negative effects in Vietnam,” Vietcombank Securities (VCBS) said in a report released on Monday.
Vietnam’s economic stability has been challenged but has stayed firm against global turbulence, the brokerage house said, predicting that the country’s GDP would grow 6.6%-6.7% this year, higher than the government’s target of 6.5%.
With prices of commodities, particularly those of fuels, staying low, Vietnam’s consumer prices are calculated to rise 0.2%-0.3% month-on-month in October and below 1.5% for the whole 2015.
Bank lending is expected to continue expanding in the fourth quarter and likely to grow 17%-18% this year, says the report. Upward pressures on dong-denominated interest rates have eased much in the short term.
Assuming that the global economy would not undergo shocks, VCBS analysts forecast the Vietnamese dong would not be weakened further through the year’s end. However, dong devaluations are possible in 2016.