World Bank: Vietnam Economy to Grow 6.5 per cent in 2008

The World Bank has forecast in its East Asia Pacific Update that Vietnam’s economy will slow to 6.5 per cent this year and next year thanks to government’ stabilization packages after 3 years of red-hot growth rate of more than 8 per cent.

 

Vietnam’s forecast GDP growth will take the lead in the South East Asia next year, Martin Rama, the World Bank’s Acting Country in Vietnam, said, explaining that Vietnam is better at dealing with crisis than other countries in the region thanks to its economic restructuring before.

 

The high forecast is based on Vietnam’s FDI attraction and exports. Despite the global downturn, Vietnam’s exports posted 34 per cent growth in Jan-Nov, and the Asean country attracted US$59.3 billion in first ten months, equivalent to two thirds of its GDP value, Martin Rama said.

 

However, the World Bank cautioned that earlier tightened monetary policy to curb high inflation has put pressures on local banks and businesses, and currently pressures have been loosened but the quality of assets of banks will likely drop in 2009.

 

Current account deficit will be up to 13 per cent of GDP value this year from 10 per cent last year and will drop next year. Overall fiscal deficit is forecast to hit 6.2 per cent of GDP this year, up 5.6 per cent.

 

WB also predicted that the government will boost spending in coming months.

 

The government of Vietnam is preparing a stimulus package of measures including fiscal spending of US$1 billion to boost production and consumption to avert the global downturn.

 

Earlier, IMF and ADB cautioned that the 6.5 per cent GDP growth for 2009 is too ambitious. (WB’s report)