In contrast with previous optimistic forecasts for Viet Nam’s economic growth in 2018, the World Bank (WB) has estimated a modest figure of 6.5 per cent, 0.2 percentage point lower than the National Assembly’s target.
In their latest East Asia and Pacific economic update announced on April 12, the WB said Viet Nam’s economy will continue to be stable and sustainable but with a very conservative growth increase compared to predictions from other international organisations, at about 0.1 to 0.6 percentage points lower.
Sudhir Shetty, World Bank Chief Economist for the East Asia and Pacific region, said since Viet Nam’s agricultural sector had recovered strongly in 2017, the country will find it hard to achieve an economic breakthrough in 2018.
Dinh Tuan Viet, senior economist at the WB in Viet Nam, added that the report was made without the preliminary data for Viet Nam’s economy in the first quarter.
Viet said the WB is cautious and wants to continue collecting data before issuing further predictions.
As for the rest of 2018, the WB says Viet Nam’s slow structural reforms can make the current recovery process weak, slowing growth in the medium term. In addition, poor budgetary control will hinder poverty reduction as well as human resource investment.
On another hand, the country’s current levels of trade turnover and foreign investment are high, making Viet Nam’s economy vulnerable to protectionism-related risks.
These risks require further steps to enhance macro-economic resilience, including the continuation of flexible exchange rate management, foreign exchange reserves strengthening and stricter monetary policy application, in line with the State Bank’s monetary growth policy, said Viet.
In the fiscal sector, revenue-expenditure reforms need to be deepened, including expanding the tax base, rationalising the public administration and increasing the efficiency of public investment.
In addition, reforms within the State-owned sector, such as regulatory improvement for investment, including capital and land, should be carried out simultaneously to ensure the country can maintain stable growth.
"Viet Nam has grown into a much larger economy, so 1 per cent growth now and 1 per cent growth in the past five years require different amounts of effort," he added.
The WB report emphasises that although the outlook for Viet Nam’s economy in the short term is generally favourable, there are still great challenges.
Since the end of the first quarter, different forecasts for the country’s economic future in 2018 have been published.
The Central Institute for Economic Management (CIEM) estimated that economic growth in 2018 may reach 6.67 per cent, while the Vietnam Institute for Economic and Policy Research (VEPR) gave a higher number of 6.83 per cent.
Other organisations such as the Asian Development Bank and the Hongkong and Shanghai Banking Corporation Limited, varied greatly in terms of growth rates for Viet Nam in 2018, ranging from 7.1 per cent as one of the strongest growth in the region, to 6.5 per cent. — VNS