Vietnam sees strong external demand, soft domestic consumption

HANOI - Vietnam continues to benefit from strong external demand, despite soft domestic consumption, with activity indicators in February continuing to show slow but steady improvement. ANZ Bank is maintaining its GDP growth forecast of 5.6% and 5.8% for 2014 and 2015 respectively, and has downgraded its 2014 inflation forecast to 7-7.5%.

ANZ says foreign direct investment is a steady buffer for Vietam’s economy with industrial production boosted by FDI-related manufacturing. External trade has posteds a narrow year-to-date surplus and the VND is stable, enabling the central bank to add to its reserves. But the bank says easing inflation points to weak consumer sentiment and that lack of transparency in Vietnamese banks’ NPLs is still a challenge. www.live.anz.com (ATI).