The Two Biggest Economic Worries for Vietnam

Ther Economist provides a favorable overview of Vietnam’s “V-shaped” recovery in a recent article, but cites two big worries ahead for foreign investors:  Inflation and bureaucracy.

“The first is that, unless the government can find the will to rein in spending, restrain credit growth and cut the budget deficit, it will be hard to ease persistent and perhaps self-fulfilling fears about the return of inflation. This reached its peak of an annual rate of 28% in August 2008, leading to the hoarding of rice and panic buying of gold.

“Second, the focus on the government’s fiscal stimulus has distracted it from reform, the pace of which has disappointed some since Vietnam joined the WTO in 2007 … That means micro reforms such as opening up the telecoms and retail industries to foreign competition. But it also means streamlining the clunky, all-pervasive state-owned enterprises, and, more generally, tackling the scourges of corruption and red tape.”

The reform-slowdown in particular has been a resounding theme in other recent reports and is causing many to question whether Vietnam has the will to take its next crucial steps toward economic prosperity.

More on the Economist’s economic outlook for Vietnam

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