Wed, April 11, 2012
Business > Economy

ADB forecasts Vietnam's GDP in 2012 to slow to 5.7 pct

2012-04-11 06:55:21 GMT2012-04-11 14:55:21(Beijing Time)  Xinhua English

HANOI, April 11 (Xinhua) -- The Asian Development Bank (ADB) said here on Wednesday that Vietnam's gross domestic product (GDP) growth would slow to 5.7% in 2012 before picking up to 6.2% in 2013.

"Vietnam's average inflation this year could ease to just under double digits, providing policy settings are kept sufficiently firm, but then expected to quicken to 11.5% in 2013," said Tomoyuki Kimura, ADB country director for Vietnam, during a press conference to launch a report entitled Asian Development Outlook 2012.

Kimura said the tight policy adopted to curb high inflation in 2011 also slowed economic growth. To support flagging economic growth, the Vietnamese authorities have slightly loosened monetary policy in early 2012, and signaled that further easing is likely if inflation trends down.

According to Kimura, the Vietnamese government's efforts on structural reforms obtained positive results. However, he stressed that the government needs to increase the transparency of the reform process, particularly in relation to the state-owned enterprise(SOE)sector.

"Increased transparency of the financial performance of state enterprises would provide a strong signal to the market that the government was committed to reforms," said Kimura. "The reform process would also benefit from more information on the progress of structural reforms to date relative to government's targets and objectives."

ADB said Vietnam's rapid growth in lending over several years, followed by the squeeze on credit in 2011 and exacerbated by downturns in property and equities markets, have added to stresses for banks.

"Safeguarding the banking sector should be the immediate priority," Kimura said, "the longer-term requirement is to develop a diversified and efficient financial system that can mobilize the funding to meet the 7-8% economic growth target. These complex reforms, which will take years to complete, would benefit from coordination with the proposed restructuring of SOEs."

According to ADB's forecast, Vietnam's export growth will slow down as compared to last year, owing to weaker world trade, although Vietnam should benefit from the expected gradual pickup in the United States, its biggest export market.


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