The International Monetary Fund (IMF) is the latest foreign institution to cut back Vietnam’s 2012 gross domestic product (GDP) growth forecast due to weakening demand worldwide.

Vietnam's GDP growth in 2012 and 2013 will likely be 5.1 percent and 5.9 percent, respectively, compared with 5.9 percent in 2011, according to the recently released IMF World Economic Outlook 2012 report.

Vietnam's growth in 2017 is forecast to recover to 7.5 percent.

In addition, the IMF also predicted that Vietnam's inflation will be at 8.1 percent and 6.2 percent in 2012 and 2013, respectively. Its current account in 2012 increased 0.3 percent, while in 2013 it will decrease by 0.9 percent.

The unemployment rate will remain at 4.5 percent in 2011-2013.

Earlier, the IMF predicted that Vietnam's GDP would grow 6 percent and inflation would fall to 10.75 percent in 2012, higher than the expected GDP growth forecast by the Government of Vietnam, at 5.2 - 5.7 percent.

According to the IMF, in Vietnam and other ASEAN economies, economic growth is affected largely by the gloomy global picture and weakening aggregate demand.

The World Bank (WB) has also taken the same move in cutting Vietnam’s 2012 GDP growth forecast.

That institution now forecasts that Vietnam’s GDP growth in 2012 will be around 5.2 percent, lower than the 5.7 percent forecast given in May and down from the level of 5.9 percent in 2011, according to the WB’s latest report on the economic outlook in East Asia and Pacific announced on October 7.

The WB also forecasts Vietnam’s 2013 growth at about 5.7 percent.

The bank said Vietnam and China are two rare economies in the region where exports have not declined, while most other economies saw exports drop from 15-20 percent in 2011.

Meanwhile, imports in most East Asia-Pacific countries have decreased, and the trade balance and the current accounts during the first half of this year tended to deteriorate year-on-year.

However, the WB also said that Vietnam’s investment growth has eased this year because the country focused on taming inflation last year and the first half of this year. This trend can be improved in the last half of this year when Vietnam’s policies become more adaptable.

Also in its report, the WB forecasted the growth of developing East Asian countries at about 7.2 percent this year and by 7.6 percent in 2013, lower than the previous forecast of 7.6 percent and 8 percent, respectively.

In the updated Asia Development Bank (ADB) Outlook Report 2012, issued on October 3, the organization cut Vietnam’s growth forecast to 5.1 percent, down from the level of 5.7 percent given in its report in April.

The cut was mainly due to the reduction in the global outlook.

On the same day, the Hong Kong – Shanghai Banking Corp (HSBC) also adjusted Vietnam’s 2012 GDP down to 5 percent, compared to its earlier forecast of 5.1 percent in May and 5.7 percent in the beginning of the year, according to “Recovery signs return”, HSBC’s report on Vietnam’s market prospects.

The economic depression would prompt improvement of the business environment as well as restructuring of state-owned enterprises. “We expect significant changes in the fourth quarter of 2012 on enhanced credit growth and rapid export recovery”, said HSBC.

Earlier, Vu Duc Dam, Minister – cum - Chair of the Government Office, said at the government meeting for September this year that GDP growth rate would hover around 5.2 percent – lower than his previous forecast of 5.5 percent.

The year growth target of 6 percent-6.5 percent will not be realized, thus the goal for next year will be lowered to 6 percent, he added.

Standard Chartered Bank, in its Asia Focus report in July, predicted Vietnam's GDP will increase by 5 percent in 2012, lower than the previous estimate of 5.8 percent.

Also in July, Australia-New Zealand Banking Group (ANZ) forecast that Vietnam’s GDP growth may stay at 5.5 percent in 2012, unchanged from its previous forecast earlier in the year.