JLL: Overview Vietnam Economy 3Q 2018

Vietnam's economy retains the growth momentum: Vietnam's GDP witnessed the highest level of nine-month growth since 2011 with the growth of 6.98% y-o-y. As of 3Q18, the GDP achieved the growth of 6.88%, lower than the 7.45% increase in the first quarter but higher than the increase of 6.73% in 2Q18. This result indicated the timely and effective administration of the government to improve the growth across all sectors. In particular, the industrial and construction sector registered significant growth of 8.89% for nine months of 2018, the service sector and the agro-forestry-fisheries sector came next with a healthy boost of 6.89% and 3.65%, respectively. In the last quarter of the year, Vietnam's economy may face challenges due to inflation, global trade war and The Federal Reserve System (Fed) raise the dollar interest rate. However, if the existing growth rate of all economic sectors keeps its pace, it will be possible to overpass the target of 6.7% in 2018.

Retail turnover and international arrivals kept rising: The cumulative retail turnover in nine months of 2018 increased by 11.3% y-o-y. The total number of international tourist arrivals in this same period, according to the Vietnam National Administration of Tourism, hit over 11.61 million visitors with an increased of 22.9% y-o-y. Specifically, China and South Korea remained the largest number of visitors, with a total of more than 6.3 million arrivals

Vietnam's FDI stabilised its growth: As of September 2018, the total FDI pledged to the country was nearly USD 25.37 billion, equal to 99.6% over the same period in 2017. In particular, there were 2,182 newly registered projects worth USD 14.1 billion, equal to 97% y-o-y. The FDI disbursement recorded USD 13.25 billion, an increase of 6% y-o-y. When it comes to the 17 investment industries, the most attractive sector belonged to the processing and manufacturing, hit USD 11.3 billion and accounting for 44.6% of total capital. The real estate and retail sector remained as the second and third rank with USD 5.8 billion and USD 2.1 billion, respectively. Regarding of 104 investing nations in Vietnam, Japan stayed the lead with total USD 7 billion investment, accounting for 28% of the FDI, Korea followed with USD 5.6 billion and Singapore took the third place with USD 3.6 billion. Smart City with total investments of USD 4.14 billion in Hanoi by Sumitomo Corporation (Japanese), the polypropylene manufacture plant project invested by Hyosung Corporation (Korea) with total capital of USD 1.2 billion in BR-VT, the additional investment of USD 1.12 billion in Laguna (Vietnam) Co., Ltd. by Singapore investor in Thua Thien Hue still topped the list of notable FDI projects in this year.

CPI trending up in 3Q18: 3.57% is the average of Vietnam's CPI for the nine months of 2018 compared to the same period last year. In September, Vietnam's CPI increased 3.98% y-o-y and 0.59% against August, which mostly driven by the hikes in education tuition and electricity and gas cost. Amongst 11 surveyed groups of products and services, prices in the medical costs, tuition fees and the food sector in nine months of 2018 recorded the strongest growth rates at 18.26%, 7.02% and 4.09% y-o-y, respectively. The index of housing and construction materials rose by 3.73% y-o-y on average whilst the telecom services recorded a downturn of 0.60% compared to the same period in 2017, which slightly helped to stabilise the market. Given the government's attempts to control inflation, the target of CPI under 4% in 2018 is likely achievable. MOF forecasts CPI for the whole year 2018 increased from 3.73% - 3.95%. However, the pricing management still needs to proceed carefully due to the trade war and complicated global financial market.

Vietnam's trade surplus continuing: The country's trade surplus has reached USD 5.57 billion from the beginning of 2018 up to 15th September, 2018, according to the General Department of Vietnam Custom. The estimated export revenue in nine months of 2018 reached about USD 178.91 billion, a robust increase of 15.4%, whilst the import value was recorded at USD 173.52 billion, up 11.8% y-o-y. The United States and the EU remain as the two largest export markets in the context of the US-China trade war continues to escalate. Of that, the total export to the United States was USD 34.9 billion, strongly increased 12.5% and to the EU was USD 31.1 billion, up 9.6%, compared to the same period in 2017.  The key export products comprise phones and devices, electronic appliances, garment and textile products. In the meantime, China and South Korea remained the key import sources with a total import value of USD 47.1 billion and USD 35 billion in the order, for gas and oil, garment, machinery, electronic equipment, computers, mobiles and other devices.

Strong surge in number of newly registered enterprises: As of end 3Q18, there were 96,611 newly established enterprises in total, up 2.8% regarding the number of companies, and 6.7% regarding registered capital from the same period in 2017. The registered capital averaged VND 10 billion per newly established enterprises, up 3.8% y-o-y. In nine months of 2018, the number of new businesses in the real estate sector hit to more than 5,000, grew 41.6% y-o-y and accounting for 5.1% of the total newly registered enterprises. 73,103 enterprises temporarily ceased operation by end of September 2018, increasing by 48.1% y-o-y. Of the total, 50,050 enterprises temporarily suspended operation without registering or waiting for dissolution, an increase of 62.3% y-o-y.