EuroCham Business Climate Index - Quarter 3/2015

Ho Chi Minh City, 4th of December 2015, results of the 20th quarterly EuroCham Business Climate Index (BCI) survey, conducted in November 2015, shows that business confidence, outlook and expectations for the future among European businesses in Vietnam dropped slightly from the previous quarter. During the third quarter 2015 the BCI dropped to 75 points from the previous quarter’s score of 77. The score continues a trend observed during 2015 that indicate stabilisation and expresses an improved confidence in the business climate by participants of the survey. 

A slight rise from previous quarters rating and continued indication of stabilization at a higher level of business confidence

In response to the question of how businesses perceive their general business situation 57%, the largest group of respondents said it is “good”. The same percentage of respondents held that perception during the previous quarter. The second largest group at 30% perceive the business situation as “neutral”, a slight rise from previous quarters 27%. “Excellent”, “not good” and “very poor” business situations were all in the single digit range and reported by 3%, 9% and 1%, respectively. 

Continued positive outlook on the future business environment

The greater majority of respondents, like the previous quarter continued to perceive their business outlook as “positive” and the number saw a rise from 55% last quarter to 58% during this one. The second largest group of respondents remain “neutral” in their outlook at 27%, in line with the 27% from last quarter. The remaining participants were divided between 4% expecting “excellent” conditions and 10% expecting “poor” conditions, with 1% of participants reporting “very poor” conditions. 

Continued overall confidence in the macroeconomic outlook for Vietnam but with some concern 

In the participants assessment of the macroeconomic outlook for Vietnam 61% expects stabilization and improvement, a rise from last quarter’s 52%. Participants expecting the macroeconomic situation not to change declined from 33% to 26%. A slightly smaller number of participants from previous quarter expect deterioration of the macroeconomic conditions, shifting from 14% to 13%. 

Concerns for inflation and its impact on the business environment 

Three in five (61%) of the participants in the BCI expects that inflation will have a minor impact on their business over the months to come. and 23%, close to one in four of the respondents holds concerns of significant impact to their business due to inflation. 14% of the participants believe no noticeable impact will come from inflation. 2% of respondents said that inflation is threatening their business. 

A reduction in the expected inflation rate: The participants expect that over the next 6 months the market will see a rise in inflation from last BCIs estimate of 3.40% to 5.38%. 

Business strategy

For headcount development the largest group, 44% of participants, said that they are considering increasing slightly the number of employees. With the second largest group at 33% saying that they expect to maintain the number of employees at the current level. 

In difference, regarding investment plans for the medium term the largest group at 41% saying that they will maintain the same level of investment. This is followed by the second largest group at 33% expecting to maintain their level of investment. This is practically a shift of the two groups from last quarter.  

In terms of expected orders/revenue the largest group with 47% of participants said they expect a slight increase. The second largest group at 29% said they expect to maintain the same level. 
The profile of the participants of the BCI survey varies and the number of employees range from less than 50 to above 500. The largest group of respondents during this quarter is engaged in the service sector and the second largest group of respondents is in manufacturing whereas the third largest group is in trading.

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