According to the World’s Bank latest report on Vietnam’s economic situation, Vietnam's economic growth momentum has been strengthened and accompanied by macroeconomic stability. Recent growth is higher due to favorable domestic and external conditions, but the growth may gradually moderate.
According to the World Bank, the development of the competitive logistics service sector is one of the four pillars of growth-oriented reform. Photo: N.Linh.
According to the World Bank, the recent growth has been driven by a cyclical increase in global demand as well as a recovery in investment from FDI and private sector and an ongoing shift of labor away from agriculture into more productive manufacturing and service sectors.
“Vietnam’s high economic growth in 2017 and in the first quarter of 2018 is impressive and gives the country a firm foundation to move forward,” said Ousmane Dione, the World Bank Country Director for Vietnam.
Real GDP grew by nearly 7.4% in the first quarter of 2018, thanks to a favorable external environment with global GDP growth expected to peak at 3.1% in 2018.
According to the World Bank, Vietnam’s medium-term outlook has improved further since the last Taking Stock release in December 2017. Real GDP is projected to expand by 6.8 % this year (up from 6.5 % in the previous forecast) before moderating to 6.6 %in 2019 and 6.5 % in 2020, due to an expected slowdown in global demand. Inflation is forecasted to remain around the 4% government target.
“The current favorable economic conditions with high growth and low inflation offer a unique opportunity to push ahead with reforms,” said Sebastian Eckardt, Lead Economist for the World Bank in Vietnam.
“Prudent macroeconomic policies should be accompanied by comprehensive and deep structural reforms, including regulatory reforms to remove barriers to reduce the cost of private sector activity, human capital and high-quality infrastructure investments, and further reforms to enhance productivity of state-owned enterprises."
Although the improved short-term prospects, the WB assessed that risks remain significant. Domestically, the slow progress in restructuring of state-owned enterprises and banking sectors could adversely impact the macro-financial situation, undermine growth prospects, and create large public-sector liabilities.
External risks include escalating trade protectionism, heightened geopolitical tensions and faster-than-expected monetary tightening which could lead to disorderly financial market movements.
Reform priorities to reduce trade costs and enhance Vietnam's competitiveness, as recommended by the World Bank, have four main pillars: • Reducing trade costs - related to time to comply with specialized inspection measures before and at the border gate and at the border gate; Improving trade –related infrastructure and quality of connectivity; Building a competitive logistics service; Strengthening interagency coordination and partnership with the private sector.
Source: VCN
Key words: economic prospects, improves with, GDP, projected to expand, 6.8%
