We maintain our forecast for Vietnam’s real GDP growth to pick up slightly to 6.9% in 2018, from 6.8% in 2017, after the economy expanded by 7.1% y-o-y in H118. The robust growth momentum will continue to be underpinned by government efforts to liberalise trade and investment, as well as to boost the private sector’s foot print. However, risks are weighted to the downside. Vietnam recorded real GDP growth of 7.1% y-o-y in H118 (7.5% y-o-y in Q118), underpinned by broad-based expansion across all three major industry categories, but in particular, the manufacturing sector expanded by more than 10.0% y-o-y. This was in line with our expectations for the manufacturing sector to be an outperformer, and we maintain our forecast for headline growth to come in at 6.9% for 2018, up from 2017’s 6.8%. Efforts by the government to further liberalise trade and increase the foot print of the private sector in the economy should help to ensure resilient growth. However, we note that risks to our view are to the downside given rising social instability and deepening global trade tensions.

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