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World Bank raises Vietnam’s 2017 GDP growth forecast to 6.7%
World Bank raises Vietnam’s 2017 GDP growth forecast to 6.7%
12/12/17
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The
World Bank has revised its 2017 growth forecast for Vietnam to 6.7% from the
projection of 6.3% made last October, citing stronger momentum in domestic
demand, manufacturing, and services.
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This
means that Vietnam is expected to meet the growth target aimed for by the
government, which many experts had earlier written off as an elusive goal
given the weaker-than-expected growth in the first half of 2017.
According
to a Taking Stock report released on December 11 that domestic demand
remained buoyant, fuelled by a low inflation rate and rising real wages,
while global demand recovery helped Vietnam’s manufacturing and agricultural
sectors.
According
to the General Statistics Office (GSO), Vietnam’s economy strengthened in the
third quarter, growing by 7.46% from the same quarter last year, thanks to a
strong performance in the manufacturing of electronic and steel products.
“Growth
momentum picked up across major economies and global trade recovered in 2017,”
said Ousmane Dione, the World Bank Country Director for Vietnam. “With
incomes rising and poverty falling, Vietnam’s economy had another good year
of strong growth and broad macroeconomic stability.”
Low
inflation and rising real wages sustained buoyant domestic demand and private
consumption, while the stronger global economy helped Vietnam’s
export-oriented manufacturing and agricultural sectors. Job growth continued,
with 1.6 million new jobs added in the manufacturing sector over the past
three years, and 700,000 additional jobs in the construction, retail, and
hospitality sectors, leading to higher aggregate labor productivity. Labor
demand also contributed to rapid wage growth, with wages increasing by 15
percent cumulatively between 2014 and 2016.
Despite
progress in resolving non-performing loans, risks remain, including the lack
of robust capital buffers in some banks, especially amidst rapid credit
growth. The World Bank said that Vietnam’s near-term outlook has improved
over the past six months but warned that a slowdown in structural reform
could weaken the ongoing recovery and weigh on Vietnam’s medium-term growth
potential.
Sebastian
Eckardt, the World Bank’s lead economist for Vietnam, said structural reform
remains a central priority in view of tepid productivity growth.
He
added that by building on progress already made, Vietnam can further lift
productivity growth by making investments in needed infrastructure and skills
as well as through deeper reforms of the business environment, state-owned
enterprises, and the banking sector./.
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All comments [ 9 ]
By building on progress already made, Vietnam can further lift productivity growth by making investments in needed infrastructure and skills as well as through deeper reforms of the business environment, state-owned enterprises, and the banking sector.
The Vietnamese government has already responded to the tight budget constraints by cutting spending growth, especially in investment and other discretionary spending.
So great for Vietnam to celebrate the Human Rights Day!
It is important to better align spending with national priorities, maximising the impact of capital and achieve efficiency gains in key sectors of the economy.
With public debt closes to the statutory limit of 65 percent of GDP, Vietnam’s government faces tight budget constraints for several years to come.
To meet the 2018 goals, local authorities should cut interest rates, ensure credit is available for enterprises and strengthen the management of the gold and foreign currency markets.
This will push the government's effort of enhancing social welfares.
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