Vietnam’s economic growth is forecast to accelerate to 7.1% this year, before softening to 6.8% in 2019, the Asian Development Bank (ADB) said in a report released on April 11.
|Vietnam’s economy continues to be driven by the manufacturing sector|
ADB Country Director for Vietnam Eric Sidgwick said that thanks to able macroeconomic management, Vietnam’s economic growth will see a spurt in 2018, and become one of the strongest performers in the Asia-Pacific region.
He said that Vietnam’s robust growth will be driven by strong manufacturing and export growth, rising domestic consumption, strong investment, and an improving agricultural sector.
The economy expanded by 6.8% last year and 7.38% in the first three months of 2018, its best first-quarter performance in a decade, according to official data.
With such strong growth projections, Vietnam’s inflation is expected to reach 3.7% this year and 4% in 2019 as a result of rising domestic demand and global commodity prices.
Aside from highlighting Vietnam’s strong growth potential, the ADB underlined several major risks to its positive outlook, including the rise in global trade protectionism, as the country’s annual trade now exceeds 185% of GDP.
Vietnam is currently the second most trade-dependent economy in Southeast Asia, behind Singapore.
Aaron Batten, an ADB senior economist, said the trade dispute between China and the US, Vietnam’s two major trading partners, has the potential to spill over into trade distortions for Vietnam.
In 2017, Vietnam’s exports to China and the US accounted for 16.5% and 19.4% of its total exports, respectively.
In its report, the ADB also advised Vietnam to take greater efforts to address its skills gap to ensure growth remains sustainable and equitable.
The ABD chief for Vietnam stated that the gap between worker qualifications and businesses’ requirements is widening and if not addressed, it could become a major obstacle to Vietnam’s aspirations for development over the next decade.
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