A GDP growth rate of 7.04 per cent could be achieved in case reforms were hastened with risks of public debt and bad debt tackled thoroughly. — VNA/VNS Photo Tran Viet

HA NOI (Biz Hub) — Viet Nam's economy would grow faster in the next five years, driven by a number of free trade agreements, low commodities prices, foreign direct investment and institutional reform, experts said.

Gross domestic (GDP) was expected to average between 6.5 per cent and 7 per cent from 2016 to 2020, up from the average rate of 6 per cent of the previous five-year period, while inflation was to be controlled at 5 per cent to 7 per cent, and the budget deficit cut to 4.8 per cent GDP by 2020.

Deputy Minister of Planning and Investment Dang Huy Dong said that it was important to find new drivers for growth in the next five years.

According to Dang Duc Anh from the National Centre for Socio-Economic Information and Forecast (NCIF), in order to ensure that the economy is on the track to sustainability, the country must tackle problems such as arrears in the real estate market, non-performing loans, productivity and business competitiveness.

A long-term development strategy was needed with a clear roadmap to call for investments, he said, and added that economic indicators should be transparent to consolidate the confidence of investors in the economy.

Duc Anh stressed that the government should raise resources from all economic sectors to allow the economy to grow, in addition to measures ensuring investment efficiency and preventing waste.

The economy would fully end recession and enter a recovery period in the next five years, Mai Thi Thu, NCIF's director said. The economic growth in the coming five-year period would be boosted by low commodity prices, foreign direct investment inflow, and rising demands in foreign markets, in addition to the country's institutional reforms, Thu stressed.

NCIF raised three scenarios for Viet Nam's economic growth during 2015-16 period.

In the moderate scenario, GDP would average 6.67 per cent, and inflation would be below 5 per cent.

A GDP growth rate of 7.04 per cent could be achieved in case reforms were hastened with risks of public debt and bad debt tackled thoroughly.

In the worst case scenario, if the risks in the financial system remained together with growing public debt, in addition to negative impacts from the global economy, GDP growth rate could fall to around 6 per cent and inflation spiked to 7 per cent.

Nguyen Quoc Viet, head of Economic Development Faculty under the Viet Nam National University, Ha Noi, stressed that in order to prevent the worst case scenario from happening, it was vital to enhance the added value during the period of economic transition.

Viet said that it was important for the economy to be headed for sustainable rather than rapid growth.

However, economic experts believed there was little possibility of the worst case and the best case scenarios occurring. — VNS