Categories: Asia PacificFinance

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

CFI

Recent Posts

From Oil Barrels to Algorithms: Why the Gulf’s Digital Future Needs Chief AI Officers

With oil prices projected to plateau or decline in the coming years, Gulf states are…

3 days ago

Corporación Zona Franca Santiago: Forging the Next 50 Years of Sustainable Innovation and Growth

As Corporación Zona Franca Santiago (CZFS) marks its 50th anniversary, the organisation stands at the…

5 days ago

Central Reserve Bank of El Salvador: Driving Innovation and Financial Inclusion for National Development

The Central Reserve Bank of El Salvador (BCR) continues to set the standard for leadership,…

6 days ago

Fortress Europe? Navigating the Perils of a Global Trade War

As global trade tensions escalate, Europe finds itself in a precarious position. Caught between competing…

1 week ago

Kathrein Privatbank: Innovating Private Banking with Digitalisation, Sustainable Investing, and Regional Expansion

For over a century, Kathrein Privatbank has remained a benchmark for private banking excellence in…

2 weeks ago

La Trobe Financial: Unpacking the Rise of Private Markets and Private Credit

Private markets—particularly private credit—have experienced a marked surge in investor interest in recent years. Though…

3 weeks ago