Vietnam to miss 2017 growth target: WB
The World Bank (WB) released its Global Economic Prospects report on June 4, forecasting a global 2017 economic growth rate of 2.7 percent and a Vietnamese growth rate of 6.3 percent, lower than the 6.7 percent goal set by the government.
Workers process metal moulds at the SaiGon Industry Corporation in HCM City
In Vietnam, strong exports are projected to help growth sustain itself at slightly below 6.5 percent this year, according to WB’s report.
For Vietnam and other countries in the Asia Pacific region, commodity import growth remains generally robust. Therefore, solid domestic demand, strong infrastructure spending and FDI-led investment in manufacturing sectors and services will continue to benefit the country.
After a period of financial market volatility in late 2016, global finance conditions have improved in 2017. Although real credit growth generally moderated on tighter regulations and higher inflation, it remained high in Vietnam and China.
The withdrawal of the United States from the Trans Pacific Partnership (TPP), however, could potentially withhold significant growth opportunities from Vietnam. Changing trade policies would also affect certain economies in the Asia Pacific region, namely those with sizable exports to developed economies such as Vietnam, Cambodia, China, Malaysia and Thailand.
As manufacturing and trade pick up, market confidence rises, and commodity prices stabilise, advanced economies’ growth will accelerate to 1.9 percent in 2017, which also will benefit developed countries’ trading partners. Meanwhile, emerging markets’ and developing economies’ growth will increase to 4.1 percent this year from 2016 number of 3.5 percent.
“With a fragile but real recovery now underway, countries should seize this moment to undertake institutional and market reforms that can attract private investment to help sustain growth in the long term. Countries must also continue to invest in people and build resilience against overlapping challenges, including climate change, conflict, forced displacement, famine and disease,” said Jim Yong Kim, World Bank Group President.
In late March, the General Statistics Office of Vietnam announced that the country’s first quarter GDP growth was 5.1 percent from the same period in 2016. This slow growth is attributed to the manufacturing sector’s underperformance. As such, the low percentage of this year’s first quarter means a potential challenge to the National Assembly’s goal of a 6.7 percent GDP growth rate by the end of 2017.
Nonetheless, Vietnam Institute for Economic and Policy Research predicts that with a gradual increase in each quarter’s GDP growth rate, the goal is still attainable.