Vietnam’s growth momentum moderated since the beginning of the year, but outlook remains positive, according to Taking Stock, the World Bank (WB)’s bi-annual economic report on Vietnam released on July 1.
During the reported period, the service sector performed robustly– signaling sustained buoyancy in domestic demand and especially privateconsumption.
The public debt-to-GDP ratio declined from a peak of 63.7 percentin 2016 to an estimated 58.4 in 2018.
Recent slower growth reflected the repercussions of unfavorableexternal factors on key economic sectors.
The outbreak of African swine fever and a decline in internationalprices dampened agricultural outputs while weaker external demand moderatedgrowth of the export-oriented manufacturing sector.
Despite these signs of a cyclical moderation in growth, Vietnam’soutlook remains positive, the report says.
Real GDP growth for the whole year of 2019 is forecast todecelerate to 6.6 percent, driven by a weaker external demand and continuedtightening of credit and fiscal policies. Inflation indexes are meant to bekept below the official inflation target of 4 percent.
Ousmane Dione, the World Bank Country Director for Vietnam, said riskshave continued to intensify, reflecting heightened global uncertainty amidre-escalation of trade tensions and rising financial volatility.
Those external risks are compounded by domestic vulnerabilities,including potential slippages in fiscal consolidation, Stated-owned enterprisesand banking sector reforms could undermine investor sentiment and growthprospects.
“Vietnam needs to prepare to adjust macroeconomic policies in casesome of these risks materialise and lead to a deeper than expected downturn,”said Ousmane Dione.
He said Vietnam will also continue to push for deeper structuralreforms, enhance export competitiveness and further deepen trade integrationthrough bilateral and regional agreements.
According to the report, the tourism industry contributed 8 percent of GDP in 2017. Itsurmises that the sector’s rapid expansion has brought it to a tipping point inits development, where continued growth, if not well managed, could haveadverse economic, environmental, and social impacts.
The report suggests certain measures to ensure the long-termsustainability of the sector.
Key priorities include enhancing coordination of destinationplanning and product development, diversifying tourism products and visitorsource markets, developing tourism workforce skills, strengthening local tourismvalue chain linkages, improving visitor flow management, boosting destinationinfrastructure capacity and quality, and protecting environmental and culturalassets.-VNA