An HSBC economist calls Vietnam the most exposed major country in Southeast Asia to an economic downturn because of its reliance on foreign trade, weak corporate profits, and troubled banks. Indonesia is considered to be in the strongest position, although the whole region would suffer from another global financial crisis.
Vietnam’s vulnerability is attributed to its budget deficit, low reserves, and high inflation.
The report is the latest of several over the past few months that have warned foreign investors about the current risks in Vietnam. Contrarians contend Vietnam is a bargain to investors because of its low valuations and promising long-term prospects.
More on HSBC’s 2012 outlook for Vietnam