Vietnam ’s growth is forecast to slow to 5.7 percent this year before picking up to 6.2 percent in 2013, providing the current policies are adhered to.
The Asian Development Bank’s (ADB) Country Director for Vietnam, Tomoyuki Kimura, made the remark at a press conference in Hanoi on April 11 to launch the ADB’s annual flagship publication, the Asian Development Outlook for 2012 (ADO 2012).
Kimura said that inflation could drop to just under double digits this year, but then is expected to rise again to 11.5 percent in 2013. This is in tandem with economic growth and expectations of higher global food prices, as well as hikes in domestic electricity and fuel costs.
The ADB’s Country Economist, Dominic Mellor, said that foreign reserves are still relatively low compared to imports, making the economy vulnerable to external shocks.
He warned that lowering the interest rates too quickly could put the Vietnamese dong under renewed pressure. This will undermine efforts to stabilise the macroeconomic situation, erode the confidence of investors and consumers and affect foreign reserves.
Financial analysts praised the Government’s efforts to make structural reforms this year and stressed the need to increase the transparency of the financial performances by State-owned enterprises and restructure the financial sector. This is especially true for the banking sector, which needs to develop diverse and efficient financial systems to meet this year’s growth target of 7-8 percent.
According to the ADO 2012, the region’s growth in GDP and inflation are expected to reach 6.9 percent and 4.6 percent in 2012, and 7.3 percent and 4.4 percent in 2013, respectively. However, rapid growth in Asia is widening the gap between rich and poor, which threatens to undermine regional growth and stability.
To address inequality, policymakers in Asia need to spend more on education and health, introduce better targeted social welfare schemes, reduce or eliminate general price subsidies, broaden the tax base, create more jobs and help countries that are lagging behind, it said.-VNA