CLMV Monitor by EIC Q1/2019

The CLMV economy is likely to continue its brisk growth of around 6-7% in 2019. Effects from the global economic slowdown are expected to be limited, thanks to continued inflows of foreign investment in infrastructure construction and factory expansion. Amid rising tension from the US-China trade war, Vietnam is emerging as an FDI safe haven. Many China-based manufacturers have decided on investment relocation to Vietnam to avoid import tariffs from the US and utilize the country’s advantages. Seeing brighter prospects going forward, tourism would be another spearhead industry supported by the CLMV governments. China and other Asian countries have been the largest sources of foreign tourists and the number continues to rise. Exports are expected to maintain growth momentum, with strong international demand for CLMV-made products. Nonetheless, near-term risks come from both external uncertainty and country-specific challenges. These include fluctuations in local currencies, a potential loss of EU preferential trade treatment in response to human rights abuse in Cambodia and Myanmar’s Rakhine State, and Vietnam’s growth concentration in foreign-invested sectors.