WB: Vietnam's GDP Growth to Top Region in 2007-08

 

According to the WB’s East Asia and Pacific Updates report, the ASEAN country’s GDP growth in 2007 will be 8.2 per cent, supported by across-the-board strength in exports, consumption and investment.

 

The WB report noted two most notable economic achievements by Vietnam over the past six months are Vietnam’s WTO accession and the booming stock market, boosted by surging foreign direct investment.

 

Last year, Vietnam’s FDI commitments soared rapidly, hitting US$10.2 billion, and since the beginning of 2007 reached US$1.9 billion, WB statistics showed. The country’s foreign exchange reserve was US$12 billion by end-2006, up from US$8.6 billion in 2005, the report said.

 

However, both events of the country “pose policy challenges for the government in the short- and medium-term, with the stock market already having attracted substantial short-term attention,” it adds.

 

Poverty reduction is taking place at a rapid rate in Vietnam, where poverty at the $2 a day level is estimated to have fallen to around 36 per cent in 2006, down from over 62 per cent only five years ago.

 

Poverty rates in Vietnam are now estimated below those in Indonesia and the Philippines.

 

WB attributed Vietnam’s “exceptional poverty reduction performance” to the contribution of rapid productivity gains in agriculture, diversification to new crops and non-agricultural activities, income gains from higher international prices for key exported crops, more resources for targeted poverty reduction programs and a more pro-poor focus in public investment and other fiscal expenditure programs.

 

Concerning other Southeast Asian economies, WB forecast the GDP growth in 2007 and 2008 of Thailand to be 4.3 per cent and 4.5 per cent; Malaysia, 5.6 per cent and 5.8 per cent; Indonesia, 6.3 per cent and 6.5 per cent; Philippines, 5.6 per cent and 6.0 per cent; and other smaller economies, on average 5.9 per cent and 4.9 per cent.

 

According to the report, a decade after the financial crisis devastated East Asia in 1997-98, the region is far wealthier, has fewer poor people and a larger global role than ever before.

 

Led by continued strong growth in China, emerging East Asia now has an aggregate output of over $5 trillion, double the dollar value just before the crisis.

 

In per-capita terms, real incomes are some 75 per cent higher.

 

The poverty rate at the $2 a day level has fallen from 50 per cent of the population to 29 per cent today.

 

When Vietnam reaches middle income status (defined as annual per capita income of about $900), which could happen as soon as 2010, 9 out of 10 East Asians will live in middle income economies. (Local sources)