The World Bank has raised the 2015 growth forecast for Vietnam as the Southeast Asian country has buoyant growth conditions, compared to a moderate trend in the East Asia Pacific, it said in a report released on Monday.

Vietnam is expected to grow 6.2 percent in 2015, instead of the previous forecast of six percent, and 6.3 percent in 2016, the Washington-based lender said, citing findings from its East Asia Pacific Economic Update, October 2015 report.

The East Asia Pacific region overall is expected to grow 6.5 percent in 2015, moderating slightly from 6.8 percent last year, according to the report obtained by Tuoi Tre News.

East Asia remains one of the main growth drivers of the world economy, accounting for nearly two-fifths of global economic growth, the World Bank said, adding growth conditions will be most buoyant in Vietnam and the Philippines among the large ASEAN economies.

Vietnam’s GDP accelerated by 6.3 percent during the first half of 2015, the fastest first-half-of-the-year growth rate in the last five years, according to the report.

“The recovery was driven by strong activity in manufacturing and construction, which together contributed nearly half of overall GDP growth,” it said.

“On the demand side, stronger growth was supported by investment (spurred by strong FDI inflows) and improved private consumption.”

Vietnam’s consumer price index rose only 0.6 percent year-on-year in August 2015, down from 4.3 percent a year earlier, while the State Bank of Vietnam (SBV) was able to loosen its monetary policy stance thanks to a low inflation environment.

This meant banks were able to maintain lower lending rates than in the past, thereby stimulating credit growth to an estimated 7.9 percent (year-to-date) in June 2015, consistent with the SBV’s target range for the whole year.

The report noted, however, that Vietnam should accelerate the reforms of state-owned enterprises and the banking sector by both policy makers and private analysts to “carry growth closer to the 7 percent mark and meet Vietnam’s longer-term aspirations to become a modern, industrialized nation.”

As for the 2015 outlook, the World Bank said the medium-term outlook for Vietnam is positive on balance but subject to significant downside risks.

Vietnam’s inflation should remain low due to subdued global conditions and low global energy and food prices, whereas the fiscal deficit is expected to start adjusting through consolidation efforts to avoid further increases in public debt, according to the report.

Published twice yearly, the East Asia and Pacific Update is the World Bank’s comprehensive review of the region’s economies.

The October 2015 issue looks at the challenging global environment facing the region at a time when global trade is growing at its slowest pace since 2009, and the widespread slowdown in developing countries has intensified, the World Bank said in a press release.   

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