WB Warns Vietnam against Impacts of Fast Economic Growth
The World Bank country director Ajay Chhibber and chief economist Martin Rama have recently warned Vietnam against adverse impacts of fast economic growth although they said that the risk is still manageable.
Vietnam is facing high risk of inflation, exceeding 10 per cent for the whole year, fueled by 40 per cent credit growth, much higher than the GDP of 8 per cent though local commercial banks have been asked to increase their reserve rates, Martin Rama said.
Still, amid growing foreign investment inflow, Vietnam lacks a competent agency and policy to manage and regulate the forex, monetary policies, Martin Rama was cited by Tuoi Tre (Youth) newspaper as saying.
Martin Rama also pointed out potential risks in the central bank's permission to the establishment of financial groups of economic group like PetroVietnam, Vinashin, it said.
The country also faced trade deficit because Vietnam imported machinery and equipment, however its impacts are not so worrying, he noted.
WB official praised Vietnam for not offering subsidy on petroleum products.
Meanwhile, WB country director Ajay Chhibber is optimistic about the funding for Vietnam in the near future without estimating about the amount. He noted that some sectors like agriculture and poverty reduction still lack finances.
WB officials said they will persuade other donors to provide more funds to Vietnam in three or five years to come. Ajay Chhibber noted that FDI will soar up when Vietnam become a middle income country. (Local sources)
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