World Bank: Vietnam Sees Early Signs of Economic Recovery

Hanoi, Vietnam

Hanoi, December 3, 2014 – Early signs show that Vietnam’s economic recovery is on track, says the World Bank’s Taking Stock report, released today. Vietnam’s economic growth is expected to improve from 5.4 percent in 2013 to 5.6 percent in 2014.

This positive outlook is largely due to the country’s ongoing macroeconomic stability and continued strong performance of the foreign-invested manufacturing export sector. Positive macroeconomic conditions contributed to Vietnam’s improved sovereign risk ratings, enabling US$1 billion of government bonds to be issued on international capital markets on favorable terms.

“Vietnam’s potential for much more rapid growth can only be realized if substantial progress is made in addressing distortions such as in the state enterprise and banking sectors, that tax the economy’s efficiency and productivity,” says Victoria Kwakwa, World Bank Country Director for Vietnam. “Stepping up this reform agenda and strengthening the business environment are critical for moving forward.”

The report finds that underlying the broad pattern of economic recovery, the performances of foreign-invested and domestic firms remain dichotomous. The foreign-invested sector continues to be a significant source of growth, while the domestic private sector remains subdued, as reflected in the rising number of domestically-owned businesses that have closed or suspended operations.

“Vietnam’s potential for much more rapid growth can only be realized if substantial progress is made in addressing distortions such as in the state enterprise and banking sectors, that tax the economy’s efficiency and productivity.”

Victoria Kwakwa, World Bank Country Director for Vietnam

Over the medium term, Vietnam’s macroeconomic outlook is good, with continued modest GDP growth and a further consolidation of macroeconomic stability. The outlook is subject to two key risks: (i) relatively slow progress on SOE and banking sector reforms could adversely impact macro-financial conditions; (ii) adverse turn of events in the global economy could undermine Vietnam’s growth prospects, given the relatively large size of the export sector.

The report has a special section on Financial Sector Assessment, which summarizes the major findings of the recent Financial Sector Assessment Program. The report highlights a complex array of institutional and regulatory factors that are responsible for the weak performance of the financial sector. The government has announced a comprehensive reform program designed to address these problems faced. The FSA provides a broad set of policy recommendations that can be used to operationalize the government’s program. Source

New World Bank Report, Taking Stock, Shows Increase in Vietnamese Economic Growth


You may have an interest in also reading…

Chen Lihua: It’s a Natural Thing to Give

China’s Chen Lihua, now in her early 70s, has a net worth of well over one billion dollars. This wealth

Grant Thornton: Mobility – A Double Edged Sword?

It would be hard to imagine a chef working without a culinary knife. Different kinds of knives serve different purposes.

IFC: Moving to Green Growth in Emerging Europe, Central Asia and the Greater Middle East

As global temperatures rise, weather patterns shift and natural disasters dominate headlines seemingly every other week, climate change has become