09:22 | 21/10/2019 Economy- Society
(VEN) - The annual Asian Development Outlook 2019 report of the Asian Development Bank (ADB) forecast the Vietnamese economy would continue growing strongly in 2019 and 2020, by 6.8 percent and 6.7 percent, respectively.
According to Nguyen Minh Cuong, Principal Country Economist at the ADB, Vietnam’s gross domestic product (GDP) growth slightly decreased from seven percent in the first half of 2018 to 6.8 percent in the same period this year. However, stable domestic demand has helped restrict the adverse impact of an export slowdown on GDP growth.
The ADB predicted that the Vietnamese economy would keep growing steadily this year and in 2020 despite the GDP slowdown in the first half of 2019 and unfavorable external conditions. Vietnam’s GDP is forecast to grow 6.8 percent in 2019 and 6.7 percent in 2020, following a breakthrough result of 7.1 percent in 2018. Notably, the ADB revised down projections for Vietnam’s inflation to three percent from 3.5 percent for 2019, and to 3.5 percent from 3.8 percent for 2020.
The growth of agriculture, industries and services has slowed down slightly. Due to prolonged droughts and the African swine fever outbreak, agricultural growth decreased from 3.8 percent in the first half of 2018 to 2.4 percent in the same period this year. Meanwhile, production growth in the agricultural and forestry sectors plunged respectively from 3.1 percent to 1.3 percent and from 5.5 percent to 4.2 percent. Seafood production grew 6.4 percent.
The inflation rate decreased from 3.3 percent in the first half of 2018 to 2.6 percent in the same period this year, the lowest six-month inflation rate in the past three years. Foreign currency reserves increased and in June 2019 reached a level equivalent to a three-month import value.
The disbursement of foreign direct investment (FDI) capital in the first half of 2019 was up 8.1 percent compared with the same period last year, reaching 9.1 percent, equivalent to 8.4 percent of Vietnam’s GDP. Foreign indirect investment in the first half of 2019 almost doubled compared to the same period last year, reaching US$8.1 billion.
ADB Country Director for Vietnam Eric Sidgwick said although export growth slowed down due to the escalating trade conflict between the US and China, which has brought about a decline in global trade, the Vietnamese economy keeps growing due to increased domestic demand and FDI flows to the country. Domestic consumption is forecast to continue growing due to increases in consumer income and employment, while inflation would be curbed at a low level.
The ADB expects the recently inked EU-Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to increase market access possibilities for Vietnam to promote trade and investment on a larger scale.
The ADB report also indicates major risks to Vietnam’s economic growth, including the US-China trade conflict and
global trade decline.