Vietnam's economic growth to remain high if trade problems are avoided
Vietnam is set to continue its strong economic performance, with GDP growth forecast to rise to 7.1% this year, before easing back to 6.8% in 2019, the Asian Development Bank (ADB) said in a new report launched Wednesday.
“Vietnam’s robust economic growth will be driven by vigorous manufacturing and export expansion, rising domestic consumption, strong investment fuelled by FDI and domestic enterprises, and an improving agriculture sector,” he added.
The Asian Development Outlook for 2018 forecasts inflation to reach 3.7% on average this year, up from 3.5% in 2017, before edging up to 4.0% in 2019, as domestic demand and global commodity prices rise.
Sidgwick noted: “A broad-based increase in the government revenue effort in 2017, helped curtail the budget deficit and reduce total public debt to 61.3% of GDP by the end of 2017, from 63.6% a year earlier. This fiscal consolidation combined with moderate inflation should provide for continued macroeconomic stability.”
While highlighting Vietnam’s strong growth potential, the report notes several major risks to the outlook including rising global trade protectionism.
Vietnam’s annual trade now exceeds 185% of GDP, making it the second most trade-dependent economy in South East Asia, behind Singapore. A major disruption in trade between two of Vietnam’s largest trading partners, the United States and the People’s Republic of China, could have spillover effects on economic growth, the report noted.
The report also recommends greater efforts to address Vietnam’s skills gap to ensure growth remains sustainable and equitable.
“Vietnam has been able to mobilise an abundant supply of young, well educated, workers to attract foreign investment into labour-intensive manufacturing over the last decade,” Sidgwick said. “However, as the Vietnamese economy becomes more sophisticated, a gap between worker qualifications and business needs has emerged and is widening. If not addressed, this skills gap could become a major obstacle to Vietnam’s development aspirations”, he added.
The Asian Development Bank Vietnam launches a new report which says that Vietnam will continue to have strong economic performance this year at a press conference on April 11
“Vietnam’s robust economic growth will be driven by vigorous manufacturing and export expansion, rising domestic consumption, strong investment fuelled by FDI and domestic enterprises, and an improving agriculture sector,” he added.
The Asian Development Outlook for 2018 forecasts inflation to reach 3.7% on average this year, up from 3.5% in 2017, before edging up to 4.0% in 2019, as domestic demand and global commodity prices rise.
Sidgwick noted: “A broad-based increase in the government revenue effort in 2017, helped curtail the budget deficit and reduce total public debt to 61.3% of GDP by the end of 2017, from 63.6% a year earlier. This fiscal consolidation combined with moderate inflation should provide for continued macroeconomic stability.”
While highlighting Vietnam’s strong growth potential, the report notes several major risks to the outlook including rising global trade protectionism.
Vietnam’s annual trade now exceeds 185% of GDP, making it the second most trade-dependent economy in South East Asia, behind Singapore. A major disruption in trade between two of Vietnam’s largest trading partners, the United States and the People’s Republic of China, could have spillover effects on economic growth, the report noted.
The report also recommends greater efforts to address Vietnam’s skills gap to ensure growth remains sustainable and equitable.
“Vietnam has been able to mobilise an abundant supply of young, well educated, workers to attract foreign investment into labour-intensive manufacturing over the last decade,” Sidgwick said. “However, as the Vietnamese economy becomes more sophisticated, a gap between worker qualifications and business needs has emerged and is widening. If not addressed, this skills gap could become a major obstacle to Vietnam’s development aspirations”, he added.
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