World Bank revises growth outlook for VN
World Bank revises growth outlook for VN
The World Bank yesterday predicted Viet Nam's economic growth would close at 5.3 per cent this year, 0.1 percent lower than what the Government had forecast.
The prediction was included in the World Bank's Taking Stock report, which provides twice a year update on Viet Nam's recent economic developments.
The bank said growth would rise modestly to 5.5 per cent in 2015, but with considerable downside risks, such as low foreign-exchange reserves, weak private sector demand, a slowdown of structural reforms and a vulnerable banking sector.
"It's a bit different for high-performing countries, so growing at 5 per cent [for Viet Nam] is a bit of a let-down," said Sandeep Mahajan, one of the report's authors and lead economist at the World Bank Viet Nam.
According to Mahajan, growth remains stagnant at modest levels, which is partly the result of subdued private sector confidence, considering private investment rates dropped to 11.5 per cent in 2013 compared with 15 per cent during the 2007-10 period, and the restructuring process of state ownership.
The report noted that progress on restructuring state-owned enterprises has been slower than expected, with only 43 firms equitized this year.
However, Victoria Kwakwa, WB Country Director in Viet Nam, stressed that this process takes time.
"Viet Nam has done well in ensuring macroeconomic stability over the past year, which has been underpinned by moderating inflation and strengthening external accounts," Kwakwa said.
"Focus should now be made on slow moving structural reforms to reposition Viet Nam on a higher growth trajectory," she added.
According to the report, while exports have remained strong in recent years, which the Ministry of Industry and Trade said could increase 14 per cent this year compared to 2012, they remain dominated by low-value products.
In addition, Viet Nam's long-term growth can also be hindered by corruption, which could be reduced by focusing on administrative reforms and transparency, the WB said.
Less rely on ODA
The WB report was released ahead of the upcoming first-ever Viet Nam Development Partnership Forum (VDPF) this Thursday, a high-level policy dialogue between the Government and development partners.
This year, however, is the first time Viet Nam and its development partners would likely not disclose the amount of Official Development Assistance (ODA) committed for 2014, according to Minister of Investment and Planning Bui Quang Vinh.
The new Forum replaces the bi-annual Consultative Group meeting held since 1993, which has seen more than US$78 billion in ODA committed for Viet Nam during the 20-year period.
In 2012, foreign donors pledged $6.45 billion in ODA for the country in 2013.
Speaking at a press briefing yesterday, Vinh said as the country achieves middle-income status, the Government and its development partners must reach a more efficient way of cooperation.
"We need to adapt and adjust. It's like a baby who can't be breast-fed until five years old," he said.
"The country enters a new development period that requires us and our partners to share experiences and policies, instead of just talking about how much money we will borrow."
Vinh added that the amount of committed ODA for 2014 will be based on results of various bilateral meetings held between Viet Nam and each partner throughout the year.
The WB's Kwakwa said the country would see grant resources becoming increasingly small in the coming years, as it must cope with a transition from being a country that relies mostly on ODA with favorable conditions for low-income countries, to one that is subjected to stricter requirements for repayment.
The Forum – to be attended by Prime Minister Nguyen Tan Dung and 300 delegates representing ministries and local authorities at all level and those working in the development sector – will focus on discussing Viet Nam's socio-economic development, reducing poverty among ethnic minorities, promoting private sector engagement and vocational training.
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