In an update of its flagship annual economic publication, Asian Development Outlook 2018, Asian Development Bank (ADB) forecasts Vietnam’s economic growth at 6.9 per cent for 2018, slightly lower than 7.1 per cent projected in April as exports, agriculture, construction, and mining are expected to moderate in the second half of the year. ADB retains its 2019 growth forecast for Vietnam at 6.8 per cent.
“The economic performance was broad-based, driven by vigorous manufacturing expansion, bumper agriculture production, robust performance of services sector, resilient domestic consumption, and strong investment fueled by FDI and domestic enterprises,” said ADB Country Director for Vietnam Eric Sidgwick.
Economic growth will likely hold up well in the near term buoyed by resilient domestic demand, improved business conditions, and a stable macroeconomic environment. An anticipated increase in public capital expenditure in the second half of the year is expected to boost the growth in investment.
Vietnam’s economy, however, remains vulnerable to external and domestic challenges. Growth moderation in the major economies such as China, European Union, and Japan may dampen aggregated demand of the global trade.
The escalating trade frictions around the world could adversely impact the export performance and foreign direct investment (FDI) inflows to Vietnam. Inflationary pressure is likely to persist over the near term because of the increase in international oil prices and an upsurge in food prices.
Therefore, ADB has revised Vietnam’s inflation to four per cent this year and 4.5 per cent for 2019, up from the April estimates of 3.7 per cent and four per cent, respectively.