VINACHEM

The medium-term outlook for the Vietnamese economy is broadly positive despite persistent downside risks, the World Bank (WB) said in its East Asia and Pacific Economic Update released on October 10.

In the report, themed “Weathering GrowingRisks”, Vietnam’s GDP expansion is projected to decelerate from 7.1 percent in2018 to 6.6 percent in 2019, reflecting slower export growth and weakeragricultural production growth.

Growth is expected to further moderate in 2020and 2021 to a more sustainable pace of 6.5 percent, in line with potentialoutput.

Over the forecast horizon, inflation ispredicted to stay below the government’s 4 percent target, and the currentaccount is estimated to sustain a smaller surplus, according to the WB.

The report added Vietnam remains susceptible tochanging global economic conditions, given its high trade openness andrelatively limited fiscal and monetary policy buffers. An escalation of tradetensions and a sharper than expected global downturn could weigh on Vietnam’sgrowth.

Bolder implementation of structural, fiscal andbanking sector reforms would help to mitigate downside risks and supportsustained high growth, the WB said in its economic update.

According to WB experts, strong growth indomestic consumption and improving competitiveness are the two main drivers ofVietnam’s economic growth at present.

Regarding the foreign direct investment (FDI)flow into Vietnam over the last nine months, WB lead economist for VietnamJacques Morisset said the country remained an attractive destination forforeign investors and attracted more FDI than other countries in the region.

However, the connectivity between FDI andprivate firms in Vietnam is still weak. Therefore, the Government should takeappropriate measures to solve this problem, he added.

In its report, the WB forecast growth indeveloping East Asia and Pacific economies will decline from 6.3 percent in2018 to 5.8 percent in 2019, 5.7 percent in 2020 and 5.6 percent in 2021./. VNA