Hanoi (VNA) – Vietnam’s economy is forecast to continue improving,with gross domestic product (GDP) to expand by 6.8 percent this year, said theWorld Bank (WB) in its latest economic update for Vietnam.
According to the WB’s Taking Stock report, released in Hanoi on June 14, theVietnamese economic growth has been robust in recent time, accompanied by broadmacroeconomic stability.
Speaking at the launch ceremony,Ousmane Dione, WB Country Director for Vietnam, said the country’s impressiveeconomic growth in 2017 and the first quarter of 2018 gives the country a firmfoundation to move forward.
This is a great opportunity to invest in human resources, thereby addressingchallenges to maintain growth momentum, he said, stressing that the WB iswilling to help Vietnam achieve sustainable and long-term growth targets.
Introducing the report’s main contents, Sebastian Eckardt, lead economist of the WB in Vietnam, said current favourable economic conditions such as high growth and lowinflation offer Vietnam a special chance to boost reform.
Prudent macroeconomic policies should be parallel with profound andcomprehensive structural reforms, including reform of regulations to removebarriers and reduce operational costs for the private sector, invest inhigh-quality human resources and infrastructure, and increase productivity ofState-owned enterprises, he said.
According to the report, Vietnam’s trade balance continued to improve owning tostrong trade performance and FDI inflows, contributing to the overall currentaccount surplus, estimated at 6.8 percent of GDP in Q1 2018. The exchange ratehas been relatively stable while reserves continued to rise, reaching 63billion USD in the first four months of this year, equal to around 3.6 monthsof imports.
Against thebackdrop of low inflation, monetary policy remains accommodative. Vietnam’sconsumer price index has been ticking up slightly at 2.8 percent (year on year)in the April 2018, driven by electricity and health services price hikes. Rapidcredit growth and abundant liquidity could worsen volatility in Vietnam'sfinancial markets, especially against the anticipated tightening of globalmonetary conditions. Public debt has stabilised since 2017, with an overallfiscal deficit of 4.5 percent of GDP, and the public-debt-to-GDP ratio declinedto 61.4 percent in 2017 from 63.6 percent in 2016, said the WorldBank.
Vietnam’s medium-term outlookhas improved further since the last Taking Stock release in December 2017. RealGDP is projected to expand by 6.8 percent this year (up from 6.5 percent in theprevious forecast) before moderating to 6.6 percent in 2019 and 6.5 percent in2020, due to an expected slowdown in global demand. Inflation is expected toremain around the 4 percent government target. The current account balance isprojected to remain in surplus, but could start narrowing next year, reflectingwidening deficits on the income and services accounts. Fiscal deficits andpublic debt are expected to be under control.
The report said despite improved short termprospects, risks remain significant. Domestically, slower progress inrestructuring state-owned enterprises and banking sectors could adverselyimpact the macro-financial situation, undermine growth prospects, and createlarge public-sector liabilities. External risks include escalating tradeprotectionism, heightened geopolitical tensions and faster-than-expectedmonetary tightening which could lead to disorderly financial market movements.
The report’s special sectionlooks at reform priorities for reducing trade costs and enhancingcompetitiveness in Vietnam. While Vietnam has made great progress in reducingtariffs, there remains significant potential to reduce trade cost throughrationalization of non-tariff measures or specialized controls, more efficient bordermanagement and logistics.-VNA
According to the WB’s Taking Stock report, released in Hanoi on June 14, theVietnamese economic growth has been robust in recent time, accompanied by broadmacroeconomic stability.
Speaking at the launch ceremony,Ousmane Dione, WB Country Director for Vietnam, said the country’s impressiveeconomic growth in 2017 and the first quarter of 2018 gives the country a firmfoundation to move forward.
This is a great opportunity to invest in human resources, thereby addressingchallenges to maintain growth momentum, he said, stressing that the WB iswilling to help Vietnam achieve sustainable and long-term growth targets.
Introducing the report’s main contents, Sebastian Eckardt, lead economist of the WB in Vietnam, said current favourable economic conditions such as high growth and lowinflation offer Vietnam a special chance to boost reform.
Prudent macroeconomic policies should be parallel with profound andcomprehensive structural reforms, including reform of regulations to removebarriers and reduce operational costs for the private sector, invest inhigh-quality human resources and infrastructure, and increase productivity ofState-owned enterprises, he said.
According to the report, Vietnam’s trade balance continued to improve owning tostrong trade performance and FDI inflows, contributing to the overall currentaccount surplus, estimated at 6.8 percent of GDP in Q1 2018. The exchange ratehas been relatively stable while reserves continued to rise, reaching 63billion USD in the first four months of this year, equal to around 3.6 monthsof imports.
Against thebackdrop of low inflation, monetary policy remains accommodative. Vietnam’sconsumer price index has been ticking up slightly at 2.8 percent (year on year)in the April 2018, driven by electricity and health services price hikes. Rapidcredit growth and abundant liquidity could worsen volatility in Vietnam'sfinancial markets, especially against the anticipated tightening of globalmonetary conditions. Public debt has stabilised since 2017, with an overallfiscal deficit of 4.5 percent of GDP, and the public-debt-to-GDP ratio declinedto 61.4 percent in 2017 from 63.6 percent in 2016, said the WorldBank.
Vietnam’s medium-term outlookhas improved further since the last Taking Stock release in December 2017. RealGDP is projected to expand by 6.8 percent this year (up from 6.5 percent in theprevious forecast) before moderating to 6.6 percent in 2019 and 6.5 percent in2020, due to an expected slowdown in global demand. Inflation is expected toremain around the 4 percent government target. The current account balance isprojected to remain in surplus, but could start narrowing next year, reflectingwidening deficits on the income and services accounts. Fiscal deficits andpublic debt are expected to be under control.
The report said despite improved short termprospects, risks remain significant. Domestically, slower progress inrestructuring state-owned enterprises and banking sectors could adverselyimpact the macro-financial situation, undermine growth prospects, and createlarge public-sector liabilities. External risks include escalating tradeprotectionism, heightened geopolitical tensions and faster-than-expectedmonetary tightening which could lead to disorderly financial market movements.
The report’s special sectionlooks at reform priorities for reducing trade costs and enhancingcompetitiveness in Vietnam. While Vietnam has made great progress in reducingtariffs, there remains significant potential to reduce trade cost throughrationalization of non-tariff measures or specialized controls, more efficient bordermanagement and logistics.-VNA
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