The International Monetary Fund forecast in its annual economic outlook that Vietnam’s economy will grow between 8 per cent and 8.25 per cent next year to US$81.3 billion to be backed by strong demand, investment and private consumption, which is regarded to be broadly favorable near term, local Pioneer newspaper said on November 23.
Vietnam will maintain its high economic growth rate thanks to its booming exports, strong foreign investments in the context of slowdown of the world economy and weighted by high oil prices. With such rapid growth, per capital GDP of Vietnam will be US$916 next year, up from US$809 this year, and US$723 in 2006, the IMF said.
“The near-term outlook remains broadly favorable, and Vietnam has good prospects for sustained growth and poverty reduction over the medium term, provided that the government can take timely action to rein in demand pressures,” it noted.
Despite imports growth of 30 per cent between January and July, with rocketing oil prices and booming exports of other commodities and greater flexibility, the government of Vietnam narrowed its trade deficit and expanded its reserves to US$19 billion as of the end of May, the IMF said.
Vietnam will face its state budget deficit of 3.8 per cent of its GDP this year, lower than 2006 thanks to foreign investments and private finances, the IMF forecast.
The IFM noted improvement of its business environment after it joined the WTO, triggering the boom of the stock market, which is on track to stable development phase.
By the end of July, the market capitalization soared to US$18 billion, 25 per cent of the country’s GDP, up from 500 million by the end of 2005. The IMF favored Vietnam’s tightening control over bank lending to securities transaction, calling the local market watchdogs to boost transparency of the financial market.
The IMF also expressed its concern over the inflation, which soared 8.4 per cent by the end of July this year, up from 6.6 per cent in 2006.
The world financial institution also forecast Vietnam’s inflation will likely be 8 per cent in the remaining months, and 7.3 per cent on average this year, lower than 7.5 per cent last year.
However, the IMF warned that insufficient improvement in banking sector and SOE governance (state-owned enterprises) and continued state-sector dominance of key industries could pose additional risks, as sub-optimal lending and investment by these sectors would weaken the efficiency of investment and possibly place additional future burdens on the budget. (Pioneer)
Vietnamese
