September 29, 2015.
After the 2008 financial crisis, Vietnam and many other countries experienced extreme economic decline, with Vietnam’s economy becoming increasingly reliant on foreign investment to spur growth. Nearly reaching a recession, Vietnam saw a 5.25% decrease in GDP growth in 2012 after routinely achieving 7% growth rates.
This year, though, lower inflation—led by drops in fuel and food prices—has allowed banks in Vietnam to boost their lending, supporting economic growth. While the Vietnamese government is targeting a 6.2% growth level, the Asian Development Bank has raised its predictions for Vietnam’s growth from 6.1% to 6.5%. GDP grew 6.81% from the same quarter a year ago and was accompanied by a 9.57% growth in manufacturing and 6.17% growth in the services sector.
Much of this growth can be attributed to large amounts of foreign investment from companies like Samsung Electronics, whose exports were up by 15.8% compared to a year earlier. Out of Vietnam’s total export revenue, nearly 70% is accounted for by foreign companies.
Louie Nguyen, CFA is the CIO of San Diego-based Soledad Investment Management. Soledad invests qualified clients’ assets in markets around the world, including Vietnam.