Vietnam GDP to rebound: ICAEW
Vietnam GDP to rebound: ICAEW
Rising external demand will help revive Vietnam’s economy by 2015, according to the latest report on Southeast Asia’s economies released by the Association of Chartered Certified Accountants of England and Wales (ICAEW)
As Vietnam is an export-led economy, “it [external demand] will help boost exports”, thus benefiting the whole economy, said Mark Billington , ICAEW Southeast Asia regional director in the “Economic Insight : South East Asia” report conducted by the Centre for Economic and Business Research (CEBR), a economics partner of ICAEW.
Vietnam's GDP is expected to grow 5 percent in 2013 and 2014, before rising to the 5.5 percent mark in 2015 as the global demand improves further, he said.
Capital flows decline
According to the report, the annual growth in loans in the Southeast Asian region is expected to decline from 2012 to 2015 .
Besides, due to the U.S. Federal Reserve’s loose monetary policy in the past, loans for regional infrastructure projects and businesses have become easily accessible.
However, this may increase the rate of inflation, the price of real estate, and stock market in the region. As a result, such a kind growth [based on Fed’s quantitative easing] is not sustainable .
According to Charles Davis, head of macroeconomics of CEBR, regional businesses and people have benefited from low interest rates, which increase consumption and loans against future income.
Also according to ICAEW forecasts, because the US economy is slowly recovering, the Fed will be able to find a way out of its current loose monetary policy, thus decreasing the amount of lending and increasing borrowing costs.
The decline in capital flows is a serious pressure on the regional market.
Moreover, if investors believe that the ASEAN currencies will continue to depreciate more than previously estimated, it will be a challenge to predict about a possible regional financial crisis [as it did in 1997].
However, ICAEW believes that the external capital flows will recover quickly in 2015 when funds from the investors will come back to look for opportunities.
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