The Asian Development Outlook 2012 (ADO) report stated that Vietnam’s growth is expected to pick up to 6.2% in 2013, due to an improved global outlook and likelihood of easier monetary policies.
The ADB Country Economist for Vietnam, Dominic Mellor, said that the Government’s policy tightening was starting to take effect as inflation eased to 18.6% at the end of 2011 and 14.2% in March 2012.
He added that Vietnam’s inflation is likely to fall to 9.5% in 2012, but expected to quicken to 11.5% in 2013 due to expectations of higher global food prices and hikes in power and fuel costs.
Last year, the country’s inflation peaked in August at 23% year-on-year.
The ADO report said Vietnam shows signs of a stagnating economy, with GDP growing by only 4% in the first quarter of 2012, industrial production increasing by 4.1% year-on-year and credit shrinking by 2.5% during the first two months of this year.
In the report, the ADB expressed its support for plans by the Government to restructure the country’s financial sector.
The ADB Country Director for Vietnam, Tomoyuki Kimura, stressed that safeguarding the banking sector should be Vietnam’s immediate priority.
The Vietnamese Government has introduced various measures aimed at restructuring the financial sector, including encouraging more bank mergers and acquisitions, accelerating equitisation of State-owned commercial banks and raising bank capital requirements, said Senior Financial Sector Officer Chu Thi Hong Minh.
The Government has also recently approved a plan to revamp the securities market. The plan aims to develop markets for Government and corporate bonds, restructure securities firms and improve the payment and settlement system for securities.
These complex reforms, which will take years to complete, will benefit the Vietnamese economy when implemented in conjunction with the restructuring of State-owned enterprises, said Tomoyuki Kimura.