Vietnam’s economy to grow by 6.5 percent in 2018: WB report
Updated : Friday, April 13, 2018 4:34 PM (GMT+0700)

TheWorld Bank (WB) forecasts Vietnam’s economic growth to stabilise around 6.5percent in 2018 in its East Asia-Pacific Economic Update released on April 12.

WB forecasts Vietnam's economic growth to stabilise around 6.5 percent this year -
Illustrative image - Source: VNA

The growth is projected torise further in the short run, if the global recovery remains intact, the banksaid.

According to the report,while inflation is predicted to remain moderate thanks to a benign global priceenvironment, strong wage growth may ultimately lift core inflation. Externalbalances are projected to benefit from robust exports and FDI inflows.

However, the report stressedthat there are significant challenges, despite the generally favourablemedium-term outlook.

“Domestically, a slowdown instructural reforms could weaken the ongoing recovery and weigh on Vietnam’smedium-term potential growth. There is also a risk that fiscal consolidationmay erode pro-poor fiscal expenditure and investment in human and physicalcapital. Externally, strong trade and investment links expose Vietnam’s economyto risks associated with a potential rise in protectionism and a possibleweakening of external demand”, WB said.

These risks call for furthersteps to enhance macroeconomic resilience, including more exchange rate flexibility,a further buildup of foreign reserves, and responsive monetary andmacroprudential policies that moderate credit expansion and bolster capitalbuffers in the banking sector, it suggested.

On the fiscal front, therecontinues to be a need for deeper revenue and expenditure reforms, includingbroadening tax bases, right-sizing of the public administration, and highervalue for money in public investment, the bank said, adding that steps tosolidify macroeconomic stability need to be accompanied by progress onstructural reforms to lift productivity and potential growth, including stepsto reform the State-owned enterprise sector, improve the regulatoryenvironment, and enhance factor markets, including land and capital.


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