World Bank: Vietnam’s growth among strongest in large developing ASEAN economies

In the latest update of its Global Economic Prospects report, the WB predicted that Việt Nam’s growth in 2016 would be 6.2 per cent and then expand to 6.3 per cent in 2017 and 2018.

This trend stems from rising foreign direct investment, growing exports and solid labour markets, according to the WB.

The WB also forecast that among the large developing ASEAN economies, Việt Nam and the Philippines have the strongest growth prospects.

According to the report, State-owned enterprise (SOE) reforms in Việt Nam, which include improving transparency and governance, could reduce drains on fiscal resources.

Banking sector reforms would be priorities for improving efficiency and the allocation of capital in Việt Nam, according to the WB.

Recently, the Hong Kong and Shanghai Banking Corporation (HSBC) also kept its GDP forecast in 2016 for Việt Nam unchanged at 6.3 per cent.

In its  latest report, HSBC said that the lingering El Nino would likely continue to affect agricultural output, however, it expected that the strong development of manufacturing industries and services would lift the GDP growth in the second quarter of this year to 6.1 per cent.

Economic indicators in the second quarter of this year showed a strong recovery of the national economy, the report said.

Despite gloom in the Purchasing Managers’ Index (PMI) in the region, Việt Nam’s PMI continued to expand, reaching a ten-month high of 52.7 in May from 52.3 in the previous month. The number of new orders rose sharply, indicating that manufacturing operations are likely to grow in June. The index of industrial production and exports also recorded consistent growth in the period. HSBC put forward medium-term solutions on financial reform in Việt Nam, including broadening the profit base and adjusting accounting methods in line with international standards. Administrative measures to restrain tax evasion, the announcement of tax fraud cases and simplification of the VAT refund process would be helpful solutions, the report stated.

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