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The Communist Party of Vietnam will keep a firm grip on power in the forecast period, and despite signs of factional splits between conservative hardliners and reformers there is no prospect of major internal instability. Vietnam will continue to make strides in strengthening its ties with the West, and particularly the US. Relations with China will be frayed as a result of the two countries' competing claims to the Spratly and Paracel islands in the South China Sea. Fiscal and monetary policy has been tightened, but concerns persist over whether there is sufficient political will to implement the tougher measures that may be needed to stabilise the economy.
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