09:31 | 23/08/2016 Society
(VEN) - The World Bank (WB) forecasted Vietnam’s gross domestic product (GDP) growth of six percent this year, lower than the target of 6.7 percent as set by the National Assembly.
The WB announces the East Asia and Pacific Economic Update
The WB’s East Asia and Pacific Economic Update unveiled Vietnam’s economic development in the first half of this year, while forecasting growth prospects in the whole year. Vietnam’s GDP growth showed signs of slowdown in the first half of the year, especially in agriculture, forestry and fisheries, and the manufacturing and processing sector.
Vietnam’s economic growth reached an estimated 5.5 percent in the first half of this year, lower than that of 6.3 percent during the same period last year, according to WB Senior Economist Sebastian Eckardt.Drought and saltwater intrusion negatively affecting agricultural production was a main reason leading to the slowdown, in addition to low growth in the mining sector, the manufacturing and processing sector and exports, Sebastian Eckardt added.
WB Acting Country Director for Vietnam Achim Fock said that Vietnam’s medium-term growth maintained positive signs, reflecting through the government’s messages on improving the business environment and putting the amended Investment Law and Enterprise Law into practice. Vietnam has pushed up its international economic integration as it enters into more free trade agreements with the Eurasian Economic Union, the European Union, the Republic of Korea and the Trans-Pacific Partnership.
However the high and sustainable growth in the coming time requires more efforts in economic restructuring, which allows the country to increase labor productivity. Until now, lower labor productivity remains big obstacle to the country’s competitiveness. In addition, it is necessary to promote the restructuring of state-owned enterprises and facilitate the development of the private sector.
Although facing a slight increase in inflation and applying adjustments on public services, the consumer price index laid in range. This year’s inflation could be controlled at below five percent following the National Assembly’s target, according to the WB report. The WB also recommended that Vietnam maintain the balance between growth support and macroeconomic stability.
The WB report also indicated Vietnam’s credit growth of around 18 percent in the first half of the year, meaning that loans in the economy are increasing. Therefore, to ensure sustainable growth and avoid risks for the banking system, the State Bank of Vietnam needs to adopt appropriate solutions.
As the EU is one of the biggest trade partners of Vietnam, the Brexit may affect its economy, requiring suitable solutions and strategies of the government and businesses to reach high and sustainable growth in the medium term.