Vietnam’s economic growth predicted at 5.4pct in 2014: WB

08-Oct-2014 Intellasia | World Bank | 6:00 AM Print This Post

Vietnam’s economic growth rate in 2014 is forecast to remain unchanged from last year, at 5.4 percent, the World Bank (WB) said in its recently released economic report.

The WB said in the report that Vietnam’s economy is growing slowly. However, the WB forecasted Vietnam’s economy will grow slightly in 2015 at 5.5 percent and continue to increase by 5.8 percent in 2016.

According to the WB, Vietnam currently maintains the stability of the macro economy with low inflation. In August 2014, Vietnam’s inflation fell to around 4.2 percent from the peak of 23 percent in August 2011 largely thanks to the decrease in the prices of energy and foodstuff while the domestic demand continues to rise. WB forecasted Vietnam’s consumer price index (CPI) will increase by 4.5 percent in 2014 before surging to 5 percent in the next two years.

In addition, Vietnam’s forex market is also growing steadily as the country’s foreign currency reserves have continuously increased sharply. According to the data given by the State Bank of Vietnam (SBV)’s governor Nguyen Van Binh at his question and answer (Q&A) session on September 29, till the end of September, the country’s foreign currency reserves reached over $35 billion.

The SBV’s deputy governor, Nguyen Thi Hong, on October 5 also said that the central bank is still continuing to buy foreign currency to add the national foreign currency reserves after adjusting up the forex rate on June 19. According to the forecast of the WB, Vietnam’s foreign currency reserves would rise to $35.7 billion in 2014.

Vietnam’s foreign direct investment (FDI) inflows are still on the stable rise, but the investment in the private sector in Vietnam is slowing due to the weak credit growth and low business confidence, the WB said.

Recent geopolitical tensions with China over the South Chinese Sea have also caused turmoils in the financial and forex markets in Vietnam.

According to the WB, the long-term growth potential of Vietnam’s economy is still facing a big problem from the structural problems in the groups of state-owned enterprises (SOEs) and the banking sector.

Sandeep Mahajan, chief economist in Vietnam said at a videoconference to launch the report in capital Hanoi on Monday that Vietnam is restructuring its economy, specifically in banking system, state-owned enterprises among others.

Vietnam enjoys various conditions to become beneficiary from the world economic recovery as Vietnamese economy gains growth from exports and deeper integration into global supply chain.

As a result, when economies of the United States and Europe have positive signals, these are good news to Vietnam’s economic growth, Mahajan said.

 


Category: Economy, Vietnam

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