Vietnam's GDP growth in 2019 will decrease to 6.6% due to weakening external demand and tightened fiscal and credit policies, according to World Bank (Photo: Vietnam+)
Hanoi (VNA) - Viet Nam recently signed the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA) agreements.
Experts from the World Bank said in this context, shifting trade and foreign direct investment attraction are expected to improve investors’ sentiment.
According to Taking Stock, the World Bank (WB)’s bi-annual economic report on Vietnam, the World Bank said Viet Nam's growth momentum slowed since the beginning of the year but the outlook remains positive.
The report was launched on July 1 in Ha Noi.
The World Bank forecast that Viet Nam's gross domestic product (GDP) growth in 2019 will decrease to 6.6 per cent due to weakening external demand and tightened fiscal and credit policies. Inflation is expected to be kept under the target of 4 per cent.
Even so, World Bank experts still noted Viet Nam's positive economic outlook, with the service industry achieving good results - a sign indicating domestic demand and private consumption are increasing steadily. Debt to gross domestic product ratio decreased from a peak of 63.7 per cent in 2016 to 58.4 per cent in 2018.
Speaking at the press conference, Sebastian Eckardt, Chief Economist of the World Bank in Viet Nam, said the recent growth slowdown was due to the impact made by external disadvantages on key economic sectors.
African swine fever outbreaks occurred and international prices declined, affecting domestic agricultural production (down to 2.2 per cent). At the same time, weak external demand slowed growth in the processing and manufacturing industries. However, basic export products maintained stable growth.
Sebastian Eckardt said the recent growth slowdown was due to the impact made by external disadvantages on key economic sectors (Photo: Vietnam+)
The Chief Economist of the World Bank in Viet Nam also pointed out the risk continues as global uncertainty is rising due to trade tension and financial fluctuation. External risks are also more complex when combined with domestic vulnerabilities, including delays in the consolidation of fiscal situation, reform of State-owned enterprises and the banking sector, impacted investors sentiment and growth prospects.
However, Chief Economist Sebastian Eckardt also said the US-China trade tension created opportunities for Viet Nam as investment shifted into Viet Nam. Specifically, statistics released by the World Bank showed US imports from China decreased by 1.2 per cent while the value of its imports from Viet Nam increased by 0.2 per cent, specifically in fabrics, wood, iron and steel.
As Viet Nam has just signed the Comprehensive and Progressive Agreement for Trans Pacific Partnership and the EU-Viet Nam Free Trade Agreement, Eckardt said benefits from trade shifts are expected to improve investor sentiment. In particular, the EU-Vietnam Free Trade Agreement will attract foreign investment investment and exports if Vietnam fulfills its commitments.
In addition, Mr. Ousmane Dione, Country Director of the World Bank in Viet Nam, said the country should prepare to adjust its macroeconomic policies if the above-mentioned risks become a reality and lead to a deeper-than-expected decline.
Viet Nam will also have to continue to deepen structural reforms, enhance export competitiveness, and boost trade integration through regional and multilateral agreements, said Mr. Ousmane Dione.
The Country Director of the World Bank in Viet Nam also stated that there are many potential risks ahead in the near future, so Vietnam needs to adjust its macro policies.
According to the report, the tourism industry contributed 8 percent of GDP in 2017. It surmises that the sector’s rapid expansion has brought it to a tipping point in its development, where continued growth, if not well managed, could have adverse economic, environmental, and social impacts.
The World Bank recommends certain measures for sustainable development of the tourism industry in Viet Nam such as strengthening tourism site planning, diversifying tourism products and markets, strengthening connection of local tourism value chains, improving the management quality and tourist infrastructure, and preserving cultural and environmental values, among others. /.
