Vietnam set to grow 6.7% this year, but reforms crucial

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Vietnam street vendorThe Asian Development Bank (ADB) forecasts healthy GDP growth for Vietnam this year, although challenges persist. The country is projected to sustain 6.7 per cent growth in 2016 before the pace moderates to 6.5 per cent in the following year, according to ADB’s Asian Development Outlook 2016 report released on March 30.

In its previous outlook report, the ADB also forecast 2015 growth for Vietnam at 6.7 per cent, while the economy actually expanded by 6.68 per cent, according to official government data. Vietnam’s Prime Minister Nguyen Tan Dung, in turn, proposed raising the country’s 2016 economic expansion target to 7 per cent from 6.7 per cent.

The economic outlook for Vietnam in the next few years remains positive, even though challenges still linger, ADB country director for Vietnam, Eric Sidgwick, said. He, however, advised that Vietnam try harder to “improve productivity and support domestic businesses in their integration into the global value chain.”

Reform of state-owned enterprise reform should be boosted to mitigate the negative impacts these companies have on the economy and competitiveness, he added. The ADB also recommends that Vietnam continue enacting measures to tackle the bad debt problem of the banking sector.

Meanwhile, the International Monetary Fund (IMF) stated that Vietnam risks being “vulnerable to external shocks” if it doesn’t push through reforms to strengthen its banking system and restructure state businesses.

The county was not in a position to withstand economic blows from tightening of monetary policies elsewhere, a deep and prolonged drop in commodity prices and a slowing China without reforms, according to International Monetary Fund chief Christine Lagarde who gave an interview in in Ho Chi Minh City earlier in March.

“We believe the banking system needs to be made stronger, better and more capitalised with less stressed assets in its balance sheets so the banks can actually fuel the economy,” Lagarde said. State-owned enterprises need “better governance and to refocus on their core businesses,” she added.

According to her, the country was also at risk with public debt at about 60 per cent of gross domestic product and with one of the world’s fastest-aging societies and a working-age population that is beginning to decline.

Meanwhile, Vietnam’s parliament on April 2  has sworn in Tran Dai Quang as new president, elevating the former public security minister to one of the communist nation’s most powerful political posts. In Vietnam, the country is led by a triumvirate of priem minister, president and Communist party chief. The president is the head of state and chief commander of the military, while the prime minister — a new one is to be chosen next week — oversees the economy. Party General Secretary Nguyen Phu Trong holds the top job.

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Reading Time: 2 minutes

The Asian Development Bank (ADB) forecasts healthy GDP growth for Vietnam this year, although challenges persist. The country is projected to sustain 6.7 per cent growth in 2016 before the pace moderates to 6.5 per cent in the following year, according to ADB’s Asian Development Outlook 2016 report released on March 30.

Reading Time: 2 minutes

Vietnam street vendorThe Asian Development Bank (ADB) forecasts healthy GDP growth for Vietnam this year, although challenges persist. The country is projected to sustain 6.7 per cent growth in 2016 before the pace moderates to 6.5 per cent in the following year, according to ADB’s Asian Development Outlook 2016 report released on March 30.

In its previous outlook report, the ADB also forecast 2015 growth for Vietnam at 6.7 per cent, while the economy actually expanded by 6.68 per cent, according to official government data. Vietnam’s Prime Minister Nguyen Tan Dung, in turn, proposed raising the country’s 2016 economic expansion target to 7 per cent from 6.7 per cent.

The economic outlook for Vietnam in the next few years remains positive, even though challenges still linger, ADB country director for Vietnam, Eric Sidgwick, said. He, however, advised that Vietnam try harder to “improve productivity and support domestic businesses in their integration into the global value chain.”

Reform of state-owned enterprise reform should be boosted to mitigate the negative impacts these companies have on the economy and competitiveness, he added. The ADB also recommends that Vietnam continue enacting measures to tackle the bad debt problem of the banking sector.

Meanwhile, the International Monetary Fund (IMF) stated that Vietnam risks being “vulnerable to external shocks” if it doesn’t push through reforms to strengthen its banking system and restructure state businesses.

The county was not in a position to withstand economic blows from tightening of monetary policies elsewhere, a deep and prolonged drop in commodity prices and a slowing China without reforms, according to International Monetary Fund chief Christine Lagarde who gave an interview in in Ho Chi Minh City earlier in March.

“We believe the banking system needs to be made stronger, better and more capitalised with less stressed assets in its balance sheets so the banks can actually fuel the economy,” Lagarde said. State-owned enterprises need “better governance and to refocus on their core businesses,” she added.

According to her, the country was also at risk with public debt at about 60 per cent of gross domestic product and with one of the world’s fastest-aging societies and a working-age population that is beginning to decline.

Meanwhile, Vietnam’s parliament on April 2  has sworn in Tran Dai Quang as new president, elevating the former public security minister to one of the communist nation’s most powerful political posts. In Vietnam, the country is led by a triumvirate of priem minister, president and Communist party chief. The president is the head of state and chief commander of the military, while the prime minister — a new one is to be chosen next week — oversees the economy. Party General Secretary Nguyen Phu Trong holds the top job.

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