Boston, MA -- (SBWIRE) -- 03/06/2014 -- Although we expect the Vietnamese economy to record yet another quarter of sub-par growth in Q4 2013, we are beginning to see potential for upside surprises to domestic demand over the coming quarters. Recent data on foreign direct investment inflows, remittances, passenger car sales, and property market launches, suggest to us that domestic demand is on a nascent recovery, setting the stage for stronger 2014 growth and with it, providing a boon for the country's shipping sector.

The general consensus is expecting the Vietnamese economy to suffer yet another quarter of sub-par growth mainly due to subdued external demand and the lack of progress on banking sector reforms. This is closely in line with our view that real GDP growth will come in at just 5.3% in 2013, a slight improvement from 5.2% in 2012. Looking ahead to 2014, however, evidence of improving macroeconomic fundamentals in Vietnam (especially with regards to the outlook for domestic demand) suggests to us the balance of risks to our growth forecast of 6.0% is gradually tilting towards the upside.

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The Port of Ho Chi Minh City remains by far and away Vietnam's outperformer in terms of total tonnage throughput (41.22mn tonnes anticipated by the end of 2014), but it is the Port of Da Nang that will see the largest year-on-year (y-o-y) growth this year (7.00% compared with a forecast 6.06% at Ho Chi Minh City). These forecasts remain unchanged from last quarter.

Headline Industry Data

- 2014 tonnage throughput at the Port of Ho Chi Minh City is forecast to grow 6.06% to 41.22mn tonnes.
- 2014 tonnage throughput at the Port of Da Nang is forecast to increase 7.00% to 5.15mn tonnes.
- 2014 container throughput at the Port of Ho Chi Minh City is forecast to rise 10.0% to 4.22mn twentyfoot equivalent units (TEUs).
- 2014 container throughput at the Port of Da Nang is forecast to increase 9.43% to 173,000TEUs.
- 2014 total trade real growth is forecast to increase 6.55%.

Key Industry Trends

Evergreen-Hanjin's Intra-Asia Tie-Up Highlights Vietnam Growth Story: The newly established intra- Asia service by Taiwan-based Evergreen Line and South Korea-based Hanjin Shipping, which calls at the port of Ho Chi Minh, will boost both companies' intra-Asia operations. We have long highlighted intra-Asia trade as a region of strong growth and we note the port of Ho Chi Minh to be a specific beneficiary of the new route - with the launch of the service offering upside risk to our forecast for the port.

Vietnam Set For Belgian Link-Up: Vietnam is set to make full use of Belgian expertise in the shipping sector going forward after a collaboration agreement signed by the ports of Antwerp (the second largest port in Europe) and Zeebrugge, Rent-A-Port and Saigon Newport relating to the construction of a new bulk terminal in the port of Lach Huyen in the north of the country was announced in December 2013.

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