VN's growth prediction lowered to 6.2% in 2016

HA NOI (Biz Hub) — Viet Nam is still enjoying strong growth prospects among the large developing ASEAN economies, but its economic growth is expected to be moderate at 6.2 per cent this year, the World Bank (WB) said.

According to the bank's East Asia and Pacific Economic Update unveiled yesterday, the slowdown is driven by slower private consumption and investment growth. Inflation is projected to be moderate due to subdued global conditions and low global energy and food prices.

In addition, relatively slow progress on structural reforms poses risks to medium-term growth. Rising fiscal risks also have to be managed. Weaker external demand and heightened global financial volatility call for a continued focus on sound macroeconomic management to safeguard against possible shocks.

Fiscal consolidation, further exchange rate flexibility and bolstering foreign exchange reserves could all help reduce vulnerabilities, the economic update says.

On the other hand, Viet Nam is strongly positioned to benefit from numerous free trade agreements, especially the Trans-Pacific Partnership, the WB noted.

The bank says Viet Nam's economy has weathered the recent global turbulence well, reflecting resilient domestic demand and the robust performance of its export-oriented manufacturing sector. After a slowdown in 2012 and 2013, growth recovered to 6 per cent in 2014 and further accelerated to an estimated 6.7 per cent in 2015.

For the developing East Asia and Pacific countries, the bank forecasts their growth will ease from 6.3 per cent in 2016 to 6.2 per cent in 2017-18.

The economic update calls upon several countries' governments to take action to enhance transparency and accountability. Efforts to reduce barriers to trade in the region should be redoubled, with a particular focus on non-tariff measures and regulatory barriers, including trade in services.

The region must increase its readiness to benefit from the digital revolution, and to deal with the challenges it poses, particularly through a focus on developing the essential "analog complements" to digital technologies, the report says. — VNS