In spite of the general positive medium-term prospect, significant challenges still remain to hover Vietnam's attempts on securing a sustainable growth this year.
The recent report of World Bank on the Growth in developing East Asia and Pacific region has cooled down the optimistic prediction of Asian Development Bank (ADB) on the economy of Vietnam in 2018.
ADB has just released its Outlook and the growth of economy in Vietnam was predicted to increase up to 7.1 percent in 2018 accordingly. This is however opposite to what was projected yesterday by Sudhir Shetty, Chief Economist of the East Asia and Pacific Region of the World Bank.
The scene of the press conference
According to the report of World Bank, Vietnam’s economy in 2018 will grow even slower and at a lower rate than 2017, at 6.5 percent.
Several reasons leading to this slow down movement were mentioned at the press conference including the influence of agriculture sector, the trade war between China and the US, a deceleration in structural reforms and the risk of fiscal consolidation.
In particular, the one thing that led to the strong growth in 2017 is the strong rebound of agriculture sector, increasing global and domestic demand which improved manufacturing and trade, together with vigorous foreign investment inflows.
Sudhir Shetty, Chief Economist of the East Asia and Pacific Region of the World Bank. Photo: The Star
“The positive effect of agriculture sector rebound had already absorbed completely in 2017 and thus, the rebound effect will be worn off in 2018,” said Sudhir Shetty, Chief Economist of the East Asia and Pacific Region of the World Bank.
Additionally, the concern of rising in trade protectionism due to the trade war between China and the US was also raised at the press conference. Specifically, the influence of this trade war on Vietnam economy is inevitable as Vietnam is a member of the global value chain which relies heavily on exports.
“The trade war will surely create uncertainty and uncertainty is bad for global trade, especially for the region which depends so much on foreign investment,” said Sudhir Shetty, Chief Economist of the East Asia and Pacific Region of the World Bank.
With the opposite projections of World Bank and ADB, the big question remains is what the future holds for Vietnam economy this year.
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