VietNamNet Bridge - Due to the decline of agriculture and mining, the economic growth rate of Vietnam in 2016 forecasted by the Asian Development Bank (ADB) has been adjusted to 6 percent.

The change was made in the updated Asian Economic Prospects report (ADOU) 2016 by ADB. The ADB said economic growth in 2016 will be 6% and 6.3% in 2017. In March, the bank forecasted that Vietnam's economy will continue to be stable this year, with a growth rate of 6.7%, equivalent to that of last year. However, the rate will be only 6.5%in 2017.

Mr. Eric Sidgwick, Country Director of ADB for Vietnam,said drought in the Central Highlands and the Mekong Delta, along with low global commodity prices, have slowed economic growth of Vietnam in the first half of this year, but some sectors had strong growth, such as manufacturing, service, banking and tourism sectors.

Economic growth in Vietnam is expected to be positive in the second half of the year, thanks to the strong increase of the flow of foreign direct investment and exports, along with domestic credit growth. Besides, a slight recovery in agriculture and the increase in disbursement of capital for key infrastructure programs will be good for the economy.

A recent surge in bank lending increases the importance of efforts to tighten regulations to prevent a rise in financial sector risks. These efforts will be supported by the gradual introduction of more stringent, Basel II, regulatory standards over the next 12-18 months.

The report said that to ease the pressure of public debt, Vietnam should strengthen its fiscal policy in the direction of facilitating growth, including the rationalization of recurrent expenditures and tightening wage spending for the public sector. The ratio of administrative expenditures out of total state budget expenditures increased from an average of 8% in 2007-2009 to 11% in 2013-2016.

In the first 6 months of 2016, Vietnam recorded high trade surplus, equivalent to 8.2% of GDP. This is a significant improvement compared to 2015, reflecting continued growth in exports.

Sidgwick said that although impressive trade performance in Vietnam is expected to continue, it can be affected by the further decline of the key industrial economies, or unexpected low growth of China - an important trade partner of Vietnam.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, December 2016 will mark 50 years of development efforts.

Son Nguyen