Vietnam’s stockmarket was Asia’s worst performer last year, sliding by 69% in dollar terms. This year it has fallen further and is set to keep struggling because “Vietnam’s fundamentals are worsening”, says Andrej Hrovat of the RH&P Global Value fund. GDP expanded by 6.8% last year – that sounds a lot, but was the slowest pace in a decade – and growth of just 5% is expected this year.
The sharp drop in global demand has hit the export-driven economy. Electronics goods exports fell by an annual 13.7% in the first two months of 2009, says The Economist.
Half a million workers lost their jobs last year, and 400,000 jobs are likely to go this year – “daunting numbers” in a country that needs to add one million jobs a year just to absorb its burgeoning workforce. Car sales have fallen by 68% since last year as the middle classes have stopped spending.
The government, which is already running a budget deficit, plans to boost spending by $6bn, or 6% of GDP. That means it will have to tap global markets, says Lex in the FT.
That won’t come cheap: Vietnam is now “another bedraggled casualty” of the global crisis rather than a “hot emerging market”.