ADB forecasts 6.1% growth, 13.3% inflation in 2011

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SaigonTimes English - 44 month(s) ago 41 readings

HANOI – The Asian Development Bank (ADB) on Wednesday unveiled a report on Vietnam, forecasting moderate growth of 6.1% and inflation of 13.3% in 2011 and saying that Vietnam’s macroeconomic stability can be restored if Resolution 11 is implemented effectively.

ADB forecasts 6.1% growth, 13.3% inflation in 2011

By Thu Phuc - The Saigon Times Daily

HANOI – The Asian Development Bank (ADB) on Wednesday unveiled a report on Vietnam, forecasting moderate growth of 6.1% and inflation of 13.3% in 2011 and saying that Vietnam’s macroeconomic stability can be restored if Resolution 11 is implemented effectively.

“If the Government effectively implements its Resolution 11, and also effectively communicates its implementation progress to the markets and people, Vietnam’s macroeconomic stability can be restored.

“However, even with successful implementation of Resolution 11, it will take time for the inflation numbers to come down,” ADB said in a news release after the regional lender launched its Asian Development Outlook 2011 in Hanoi on Wednesday.

According to the report, Vietnam’s inflation is forecasted to remain high through 2011, peaking at about 16% year-on-year in the third quarter of this year and averaging 13.3% through 2011, before moderating to an average 6.8% in 2012.

“Because the monthly inflation rate was very low between April and September last year, it will not be easy for the month on month inflation rate to come below last year’s level. This means that even with successful implementation of Resolution 11, Vietnam’s inflation rate measured on “year on year” basis, will still continue to increase, and not decrease, in the next few months,” said Ayumi Konishi, ADB country director for Vietnam.

In addition, the institution said that effective implementation of Resolution 11 will slow Vietnam’s near-term economic growth rate. The bank’s report reduces its growth forecast for Vietnam in 2011 to 6.1% from 7.0% projected in September 2010. It expects growth to pick up again to 6.7% in 2012 as a more stable economic environment stimulates consumption and investment.

According to the ADB, the more stable macroeconomic situation should stimulate FDI in Vietnam in the forecast period. Besides, the overall balance of payments is expected to improve.

A deceleration in world trade from the rebound rates of 2010 and the impact of policy tightening on imports will contribute to slower growth in external trade this year. After inflows from tourism and remittances, the current account deficit is forecast at 3.8% in 2011 and 3.6% in 2012, says the report.

Overall, the report says, the change in policies this year has reduced domestic risks in the country. The medium-term outlook remains favorable, with the proviso that macroeconomic stability is restored and maintained.

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