European firms lose confidence in Vietnam’s market

The number of European businesses and companies with links to Europe that have a positive outlook about their futures in Vietnam has fallen slightly, according to the Vietnam Business Climate Index (BCI) for the first quarter released on Monday by the European Chamber of Commerce (EuroCham).

When asked about their business outlook for the next quarter, 9 percent said the outlook was “excellent”, compared to 10 percent the previous quarter, and 60 percent said it was “good”, compared to 67 percent.

The number of firms that forecast their outlook as “not good” jumped from zero to 7 percent, and “very poor” climbed from 2 to 4 percent.

With regards to their current business situation, 67 percent of respondents described theirs as “excellent” and “good”, around a 5 percent drop from the previous quarter.

A slight rise was seen in the “not good” and “very poor” answers, with 9 percent and 3 percent, respectively, compared to 3 percent and 2 percent in the last quarter.

EuroCham members that expressed confidence in a stable and continuously improving macroeconomic scenario for Vietnam in the next quarter have dropped by around 10 percent to 43 percent.

Conversely, businesses that believe the macroeconomic conjuncture could get even worse has risen 11 percent to 18 percent.

In general, the index for the first quarter stood at 78, dropping 7 points.

In an interview with Bloomberg at the Government Office in Hanoi on Saturday, Vietnamese Prime Minister Nguyen Xuan Phuc said he is confident that Vietnam's economic growth this year will meet the government's goal of 6.7 percent without adding to inflation, despite weak expansion in the first quarter.

“The main economic indicators in May are all very good with a strong pickup in exports, foreign investment and agriculture production, laying the ground for faster growth in the third and fourth quarters,” he said, adding that the growth target was difficult but not impossible.