HA NOI (VNS) — Viet Nam's gross domestic product (GDP) will likely to grow 6.5 per cent in 2015 and 6.6 per cent in 2016, the Asian Development Bank (ADB) said yesterday in Ha Noi.
In the ADB's previous forecast in March, it expected the economy to expand 6.1 per cent this year and 6.2 per cent next year.
The ADB identified three key drivers of the higher economic growth in Viet Nam, said Aaron Batten, the ADB's Country Economist – one of the report's authors.
Firstly, foreign direct investment disbursement reached a record level in the first six months of this year, approximately US$8.5 billion. This boosted manufacturing and exports, he said.
Secondly, Viet Nam was also benefiting from rising consumer spending during the first half of this year. Higher spending lifted retail sales while credit growth was also exceeding targets, he said.
The third was the Government's pro-growth monetary and fiscal policies, he said.
The economic growth was also supported by low inflation, he said.
According to the ADB, annual inflation slowed to 0.6 per cent in August from 23 per cent in August 2011. Lower global oil and commodity prices has held down transportation and food prices.
It also noted that manufacturing output growth was particularly strong, increasing by 9.9 per cent in the first half of the year as foreign-invested factories boosted production of goods for export.
Construction accelerated to grow by 6.6 per cent during the first half of 2015, owing to a modest recovery in the property market and public investment in infrastructure.
The bank said after a challenging few years, the financial sector also appeared to be picking up momentum. Credit growth now looked set to exceed official targets during 2015.
Government policy had also been aided by lower global commodity prices which had helped to contain price growth, lift disposable incomes and lower business costs.
However, the report also named challenges for Viet Nam's economy.
Slowing economic growth in China, one of Viet Nam's largest trade and investment partners, might dampen trade prospects while continued low global commodity prices would reduce export earnings for key sectors like oil and agriculture, it said.
Surging imports coupled with lower oil revenue were leading to deterioration in the current account surplus, and the El Nino weather system was predicted to reduce the agriculture output in 2016.
"To mitigate these challenges, it will be vital for the country to continue to deepen structural and financial sector reforms, increasing productivity growth and boosting Viet Nam's international competitiveness," said Eric Sidgwick, ADB Country Director for Viet Nam. — VNS