Vietnam’s economy growth remains strong in 2007, fueled by high growth rates recorded in industry and service sectors, World Bank said on its latest report on East Asian and Pacific economies November 15.
WB attributed the country’s 8.3 per cent year-on-year growth in the first nine months to strong non-oil exports, increased investment and private consumption.
The crude oil exports decreased by 10 per cent due to production capacity constraints, however, export revenues continued to grow 19.4 per cent on year.
“There has been a strong-pick-up in exports of footwear, garments, agricultural products, and seafood (even though seafood and aquaculture exports have faced food safety concerns related to antibiotic residues in the breeding areas,” the report said.
The clothing industry recorded a 32 per cent export growth during the period, making Vietnam in the world top ten garment exporters.
The U.S. is the biggest market among Vietnam’s trade partners, making up nearly a fifth of total exports, followed by EU, ASEAN and Japan. The U.S. is also Vietnam’s largest garment market, accounting for almost 60 per cent.
Vietnam has encountered high trade deficit this year, however, “the balance of payments remains sound, with the current account deficit largely creating FDI inflows, ODA and private remittances,” WB said.
“In addition, the high levels of commitments mean that actual inflows could be accelerated if there wee concerted efforts to ease implementation constraints.”
Vietnam’s current account deficit is expected to reach 3 per cent of GDP this year, up 0.3 per cent from last year.
The report earmarked Vietnam’s consumption and investment figures in 2007. The retail sales and services grew by nearly 23 per cent and total investment rose by 16.3 per cent in the first nine months, representing 42.5 per cent of GDP. Investment by the domestic private sector increased by nearly 28 per cent and now accounts for about 17 per cent of GDP.
FDI hit US$9.6 billion in the first nine months, up 38 per cent on year. Disbursement of FDI capital increased 20 per cent on year in the period, accounting for 6.8 per cent of GDP.
However, WB noticed the slow preparation and implementation of public investment projects and that disbursement from the capital state budget remain low, given the strong increase in investment by foreign companies and domestic private sector.
Vietnam’s inflation rate is estimated to hit nearly two digits because it increased 8.8 per cent by September.
WB also said the development of Vietnam’s stock market had experienced a dramatic boom over the last two years. By the end of September, the market capitalization had surpassed VND22 billion, or 32.4 per cent of the estimated GDP along with a rapid increase of earnings of the listed companies.
The WB’s report offers a positive perspective on Asian economies, saying that they are likely to remain robust in 2008 despite growing concerns about the US sub-prime crisis and increasing global oil prices. (Vietnam Economic Times, VNS)
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