World Bank maintains Vietnam’s growth forecast at 6.3% for 2017

Thursday, 2017-04-13 09:43:06
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NDO - The World Bank keeps its growth forecast for Vietnam at 6.3% for 2017, despite the economy showing signs of losing steam in the first quarter of the year, expanding by only 5.1%.

It was the worst first-quarter performance in three years, due to a slowdown in both agriculture and industrial production.

World Bank Country Director for Vietnam Ousmane Dione said the institution’s forecast for Vietnam was not revised down because the drivers of growth such as the manufacturing sector remained robust.

In its latest update on East Asia and Pacific economies, the bank says Vietnam’s medium-term outlook remains favourable, with GDP growth projected to improve gradually during 2017-2019, thanks to strong domestic demand and export-oriented manufacturing.

But it notes that downside risks also remain pronounced, warning that delayed implementation of structural and fiscal reforms could increase the country’s macroeconomic vulnerabilities and lower its growth potential.

The bank emphasises that an acceleration of structural reform to support a more productivity-led growth model would help Vietnam sustain its long-term development.

In addition, rising antitrade sentiment and associated risks of protectionist measures in major economies pose significant risks to Vietnam’s highly open economy.

In the meantime, dealing with climate change and environmental disasters continues to be a challenge for improving household welfare, especially in rural areas.

According to the World Bank, inflation pressures overall are expected to remain moderate, thanks to subdued global commodity and energy prices, with the consumer price index projected to stabilise at 4% in 2017, and the two subsequent years.

On the fiscal front, the government is expected to take steps to reduce fiscal deficit and speed up divestment to contain the further rise of public debt.

Government spending is expected to increase by only 5% compared with 8.8% in 2016.