ADB downgrades Vietnam’s outlook but says growth remains robust

Wednesday, 2018-09-26 15:54:31
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Vietnam's economy continued to perform strongly in the first half of 2018. (Photo: Doanh nhan Sai Gon)
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NDO - The Asian Development Bank (ADB) has revised down its GDP growth forecast for Vietnam in 2018 to 6.9% from a previous estimate of 7.1% but noted that Vietnam’s economy continued to perform strongly despite domestic and external challenges.

In its latest report released on September 26, the ADB lowered Vietnam’s growth forecast as exports, agriculture, construction and mining are expected to moderate in the second half of the year.

However, the ADB’s figure is still higher than the target of 6.7% aimed for by the Vietnamese government.

The economy expanded by 7.08% in the first half of 2018 and the full-year target of 6.7% is highly likely to be met, said the Ministry of Planning and Investment earlier this week.

Vietnam’s economic performance was broad-based, driven by vigorous manufacturing growth, bumper agriculture production, robust services performance, resilient domestic consumption and strong investment fueled by FDI and domestic enterprises, said ADB economist Eric Sidgwick.

He added that economic growth is likely to hold up well in the near term buoyed by resilient domestic demand, improved business conditions, and a stable macroeconomic environment.

Vietnam’s economy, however, remains vulnerable to external and domestic challenges.

Growth moderation in the major economies such as China, the EU and Japan may dampen the aggregated demand of global trade while escalating trade frictions around the world could adversely impact the export performance and FDI inflows to Vietnam.

At home, inflationary pressure is likely to persist over the near term because of increases in global oil and food prices.

The ADB revised Vietnam’s inflation to 4.0% in 2018 and 4.5% for 2019, up from the April estimates of 3.7% and 4.0%, respectively.