Late last month, the ADB said in a report that it had cut its forecast for Vietnam GDP growth to 6% this year, down from its June estimate of 6.7%.

 

Severe impact on the agricultural sector earlier this year and the contraction of the industrial sector are among the reasons behind the WB’s growth cut for the country. 

 

Sebastian Eckardt, a senior economist of the WB in Vietnam, said Vietnam could achieve GDP growth of 6% or a little higher this year though the world’s economic prospects are still dismal, Vietnam’s agricultural sector has been hit by drought and prices of materials have declined.

 

Eckardt said Vietnam’s economy is still resilient to unfavorable factors including the world economic slowdown.

 

According to the WB, Vietnam’s economic growth cooled in the first three quarters due to the severe impact of drought on the agricultural sector, a key driver for the country’s growth, and the fall of the industrial sector. However, macro-economic stability was ensured and inflationary pressure was insignificant.

 

The poverty rate dropped in the period but shrinking agricultural production posed short-term risks for poor households, especially those dependent on farming. Medium- and long-term prospects of the sector remain positive but restructuring the sector should be put on fast track.

 

Eckardt called for the Government to stabilize the macro economy and ensure the quality of growth, instead of achieving high growth in an unsustainable way.

 

At a two-day cabinet meeting which ended in Hanoi on Tuesday, Prime Minister Nguyen Xuan Phuc called on ministries and agencies to do whatever it takes to obtain GDP growth of 6.3-6.5% this year.

 

The WB expected that Vietnam’s economy would expand by 6.3% next year. To achieve this, the country will need to effectively implement fiscal policy and speed up the restructuring of the banking sector to solve macro-economic woes and fuel growth in the medium term.

 

Eckardt said the WB’s recent calculation showed that the country’s public debt is close to 65% of GDP but it would not exceed the ceiling approved by the National Assembly for this year. The Government needs to solve the lingering budget deficit to guarantee medium-term stability.

 

He said the financial sector must resolve major problems including bad debt, enhance its performance, and allocate finances to enterprises, particularly those operating efficiently, to invest in new projects and expansion plans.

 

Vietnam should continue restructuring State-owned enterprises to make them more efficient.

 

Eckardt called for more support for domestic private firms in the global integration process so that they could become the second important growth driver for the country after the foreign-invested sector.

 

In all, Vietnam’s medium-term prospects are bright and the country will remain on the list of medium-income countries, according to Eckardt.