CLMV Monitor by EIC Q2/2019
On the firm footing amid rising challenges from country-specific risks and China’s slowdown
CLMV economy will maintain its high growth around 6-7% in 2019. Amid rising global uncertainties, especially trade war, international demand to CLMV still supports growth in exports, FDI, and tourism. CLMV exports recorded a 5%YOY growth in the first two months of 2019, particularly to the countries with trade privileges and bilateral deals. Meanwhile, CLMV governments have prioritized their spending to improve business environment via infrastructure investment and new industry development. Rapid economic growth during the past years also leads to an expanding middle class which helps support domestic consumption going forward. Nonetheless, key risks ahead to CLMV economy are China’s economic slowdown, prolonged current account deficits, and country-specific uncertainties, notably a loss of EU’s trade privileges (EBA) in Cambodia and Myanmar, high external vulnerabilities in Laos and Myanmar, and a high credit growth which may lead to new bad loans piling up in Vietnam.
