Econ
WB retains Vietnam’s economic growth forecast amid heightened uncertainties
Although Vietnam’s growth momentum moderated since the beginning of the year, the outlook remains positive, the bank said.
The World Bank (WB) has forecast Vietnam’s real GDP growth in 2019 to decelerated to 6.6% for the whole 2019, from a decade high of 7.1% last year, unchanged from its latest projections six months ago, amid risks from the re-escalation of trade tensions and rising financial volatility globally.
The deceleration is driven by a weaker external demand and continued tightening of credit and fiscal policies, the bank said at the launch of the bi-annual report Taking Stock in Hanoi on Monday.
Recent slower growth reflected the repercussions of unfavorable external factors on key economic sectors. The outbreak of African swine fever and a decline in international prices dampened agricultural outputs while weaker external demand moderated growth of the export-oriented manufacturing sector.
The country’s inflation is likely to be kept below the official inflation target of 4% this year, it added.
Although Vietnam’s growth momentum moderated since the beginning of the year, the outlook remains positive, the bank said.
Vietnam’s GDP expanded 6.76% in the first half of 2019, lower than the 7.05% expansion recorded in the first six months of 2018. The rate, however, is the best first-half performance compared to that in the 2011 – 2017 period, official data showed.
During the reported period, the service sector performed robustly – signaling sustained buoyancy in domestic demand and especially private consumption. The public debt-to-GDP ratio declined from a peak of 63.7% in 2016 to an estimated 58.4% 2018.
The bank said external risks aforementioned are compounded by domestic vulnerabilities, including potential slippages in fiscal consolidation, stated-owned enterprises and banking sector reforms could undermine investor sentiment and growth prospects.
“Vietnam needs to prepare to adjust macroeconomic policies in case some of these risks materialize and lead to a deeper than expected downturn,” said World Bank Country Director for Vietnam Ousmane Dione. “Vietnam will also continue to push for deeper structural reforms, enhance export competitiveness and further deepen trade integration through bilateral and regional agreements.”
Regarding the EU-Vietnam Free Trade Agreement (EVFTA) signed in Hanoi on June 30 after nine years of wait, Sebastian Eckardt, lead economist of the WB in Vietnam, said the new-generation FTA may not benefit Vietnam in the near term, but it will enhance investor sentiment, improve Vietnam’s economic outlook and catalyze foreign investment.
In the longer term, to boost exports to the EU market, Vietnam should enhance its capacity to realize the commitments, some of which are new and difficult to meet, Eckardt suggested.
The deceleration is driven by a weaker external demand and continued tightening of credit and fiscal policies, the bank said at the launch of the bi-annual report Taking Stock in Hanoi on Monday.
Sebastian Eckardt, lead economist of the WB in Vietnam. Photo: Minh Tuan
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The country’s inflation is likely to be kept below the official inflation target of 4% this year, it added.
Although Vietnam’s growth momentum moderated since the beginning of the year, the outlook remains positive, the bank said.
Vietnam’s GDP expanded 6.76% in the first half of 2019, lower than the 7.05% expansion recorded in the first six months of 2018. The rate, however, is the best first-half performance compared to that in the 2011 – 2017 period, official data showed.
During the reported period, the service sector performed robustly – signaling sustained buoyancy in domestic demand and especially private consumption. The public debt-to-GDP ratio declined from a peak of 63.7% in 2016 to an estimated 58.4% 2018.
“Vietnam needs to prepare to adjust macroeconomic policies in case some of these risks materialize and lead to a deeper than expected downturn,” said World Bank Country Director for Vietnam Ousmane Dione. “Vietnam will also continue to push for deeper structural reforms, enhance export competitiveness and further deepen trade integration through bilateral and regional agreements.”
Regarding the EU-Vietnam Free Trade Agreement (EVFTA) signed in Hanoi on June 30 after nine years of wait, Sebastian Eckardt, lead economist of the WB in Vietnam, said the new-generation FTA may not benefit Vietnam in the near term, but it will enhance investor sentiment, improve Vietnam’s economic outlook and catalyze foreign investment.
In the longer term, to boost exports to the EU market, Vietnam should enhance its capacity to realize the commitments, some of which are new and difficult to meet, Eckardt suggested.
