Vietnam’s medium-term outlook is expected to remain broadly positive with a sustained GDP growth of 6.3 percent or more over the next three years, the World Bank said in a new report.
The latest East Asia and Pacific Update, the World Bank’s twice yearly comprehensive review of the region’s economies, was published on Thursday, providing an analytic outlook on Vietnam’s economy for the 2017-19 period.
Vietnam’s GDP growth is projected to improve gradually during the period, driven by robust domestic demand and export-oriented manufacturing.
The country’s GDP was estimated to have expanded by 6.2 percent in 2016, a .6 percent drop from 2015.
The rate is expected to recover slightly, edging back to 6.3 percent in 2017 and 6.4 in 2018 and 2019, the report predicts.
Vietnam's actual GDP growth in 2016 was 6.68 percent, with the goverment setting a 6.7 percent target for 2017.
The services sector contributed the most to the growth in 2016, followed closely by industry and construction, agri-forestry and fishery, and product taxes.
Inflation overall is expected to remain moderate, steadying at four percent over the next three years, thanks to subdued global commodity and energy prices.
Some fiscal consolidation is expected, while an acceleration of divestment is prospective, though at a gradual pace that would spur the rise of public debt, the report warned.
Domestic downside risks, such as delayed implementation of structural and fiscal reforms, could intensify Vietnam’s macroeconomic vulnerabilities and lower potential growth, while intensifying uncertainties of the global economy could dim Vietnam’s growth outlook through trade and investment channels.
Meanwhile, Vietnam’s poverty rate ($1.9 per day PPP terms) continues to decline, reaching 1.2 percent by the end of the three-year period.
Vietnam’s effort to improve household welfare for its growing population of 92.7 million continues to be challenged by its vulnerability to climate and environmental disasters.
Victoria Kwakwa, WB’s Vice President for the East Asia and Pacific, suggested that Vietnam improve its public spending and enhance global and regional integration to sustain resilience.