WB:Vietnam’s economy to grow 6.5% in 2018    
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WB:Vietnam’s economy to grow 6.5% in 2018
Apr 13 2018

In its East Asia-Pacific Economic Update released on April 12, the World Bank (WB) forecast Vietnam’s economic growth to stabilise around 6.5% this year, emphasizing that there are significant challenges, despite the generally favourable medium-term outlook.

The growth is projected to rise further in the short run, if the global recovery remains intact, it said.

According to the report, while inflation is predicted to remain moderate thanks to a benign global price environment, strong wage growth may ultimately lift core inflation. External balances are projected to benefit from robust exports and FDI inflows.

Regarding GDP growth in the first quarter of 2018, Dinh Tuan Viet, a WB senior economic expert said that initially, the figure of 7.48% is something strange but it is reasonable based on the very low growth of 5.15% in the first quarter of last year.

“Although we appreciate the stable growth and well-controlled inflation in Vietnam but the WB has put forth some notable risks and challenges, " he stressed.

Growth in developing East Asia and Pacific (EAP) is expected to remain strong and reach 6.3% in 2018, according to the latest World Bank economic report on the region. Prospects for a continued broad-based global recovery and robust domestic demand underpin this positive outlook. Still, emerging risks to stability and sustained growth require close attention.

Enhancing Potential, the April 2018 edition of the World Bank East Asia and Pacific Economic Update underscores that even with favorable prospects, policy makers in the region will be well advised to recognize and address emerging challenges.

Attending to the short-term risks associated with a faster-than-expected rise in interest rates in advanced economies and possible escalation of trade tensions will require tighter monetary policy and larger fiscal buffers. To raise growth in the longer term, boosting public and private investment, productivity growth, and human capital will be key.

“Robust growth has underpinned the region’s tremendous gains in reducing extreme poverty. To build on this success, and improve prospects for the large share of the population who remain economically insecure, will require sustaining growth over the longer term,” said Victoria Kwakwa, World Bank Vice President for East Asia and the Pacific. “Policy makers need to focus on addressing risks to economic stability while taking steps to enhance longer-term growth potential.”

“While the region’s growth outlook is positive, there are challenges for policy makers in the short and medium term,” said Sudhir Shetty, World Bank Chief Economist for the East Asia and Pacific region. “Addressing these challenges will require measures to dampen the possible impacts of a more rapid pace of monetary policy tightening in advanced economies as well as to enhance longer-term growth prospects in the face of policy uncertainty, particularly around global trade.”

To address moderating growth prospects across the region in the medium term, countries will need to find ways of raising their long-term potential growth. This could include a mix of measures aimed at: improving public spending and infrastructure provision; deepening trade integration and improving trade facilitation; implementing reforms to enhance competitiveness; and building human capital.

The WB called for further steps to implement deeper revenue and expenditure reforms and solidify macroeconomic stability accompanied by progress on structural reforms, to raise productivity and potential growth. - VOV