Deutsche Bank expects Vietnam’s GDP to grow 6.4%

Jens Ruebbert, chief country officer of Deutsche Bank Vietnam, and Juliana Lee, senior economist at Deutsche Bank, are seen at a media meeting on January 19.

The economist said this forecast was carefully made, taking into account risks Vietnam might face given global economic uncertainties. However, this is less significant than the Government’s commitments to further reforms to tap growth potentials in the long term.

Deutsche Bank anticipates the boom of Vietnam’s economy based on export growth and steadily rising foreign investment, as well as the Government’s promises on further restructuring.

With considerable progress in economic reforms, supported by foreign capital inflows, the dong might strengthen, in contrast to the predictions of its steady devaluation against the U.S. dollar, said Lee. This would also entail risks affecting Deutsche Bank’s forecast for a growth rate of more than 6%, she added.

Vietnam can achieve progress in bank restructuring and bad debt resolution. Earlier, a detailed guidance on State ownership has been released, signaling an acceleration of State-owned enterprise (SOE) restructuring this year.

SOE restructuring is vital to the financial situation of Vietnam since it not only assists long-term growth but also improves the financial situation in the coming time, Lee said. For example, the proceeds from the sale of SOEs may be used to partly settle public debt.

Lee stressed the importance of tackling bad debt and boosting credit risk management to ensure the stability of the banking system, in case interest rates went up in the medium term.

In fact, Vietnam is looking for greater foreign investments.

Recently, Prime Minister Nguyen Xuan Phuc has unveiled the intention to raise the limit on foreign ownership in banks and make it easier for foreign investors to gain access to the domestic stock market, as early as at the beginning of this year. As a result, foreign investors may be given full control of struggling banks in Vietnam.

Overall, the senior economist at Deutsche Bank said conditions would remain favorable for business and investment in Vietnam. And the country is carrying out significant improvements in their business climate.

In the ease of doing business index of the World Bank, Vietnam has moved to 82nd in 2017 from 91st in 2016.

Despite its relatively good performance in terms of getting credit, registering property and dealing with construction permits, Vietnam still needs to make more efforts in terms of paying tax, starting a business and resolving insolvency. The State Bank of Vietnam is developing related laws to facilitate the settlement of bad debts.

The forecast of Deutsche Bank for Vietnam’s GDP growth in 2017 is a little lower than that given by Standard Chartered Bank five days before.

Jens Ruebbert, chief country officer of Deutsche Bank Vietnam, said his bank last year had struck a number of deals in the market of Vietnam, including the initial public offering of Vietjet Air, Thailand’s Central Group’s acquisition of Big C Vietnam and Singha Asia’s investment in Masan Consumer.