According to the Vietnam Business Forecast Report, the Southeast Asian nation’s economic conditions will continue to stabilise as it recovers from the brink of a balance of payments crisis, but major challenges still remain.

The BMI sees the government’s commitment to pursuing market-oriented reform with an aim of doubling GDP by 2010 compared to that in 2000 as one of the country’ strengths.

However, the BMI pointed out that Vietnam faces three major challenges between now and 2017, inflation, infrastructure and education/training.

The report forecasts inflation peaking at 30 percent year-on-year in September 2008 before starting to fall gradually over the fourth quarter of this year and in 2009.

It states that the lessons learned in 2008 will aid the government in better balancing economic policy goals and will thus be more conducive to increased macroeconomic stability.

The report also forecasts GDP expansion slowing to 5.5 percent in 2008 before rising to 7 percent in 2009 and 8.5 percent in 2010.

Looking even further ahead, it says that Vietnam will record an average growth rate of 8.0 percent annually between 2013-2017.

It also predicts a boom in foreign investment as economic conditions stabilise, which will give impetus to growth in 2010 and 2011.

In addition, the BMI stresses the Vietnamese market’s attractiveness for domestic and foreign investors, pointing to its abundance of a young and diligent workforce and low labour costs.

As a result, foreign investment in production will be the main impetus for Vietnam’s economic growth in the next 10 years. The manufacturing service currently contributes 25 percent to the GPD and this figure is expected to rise to 34 percent by 2013 and 40 percent by 2017.

The BMI forecasts the country’s export growth will remain at around 15 percent annually during the 2013-2017 period, while import growth might reduce to 10 percent per year from 2010.