Asian Development Bank lowers Vietnam growth outlook to 5.1%

On October 3, in Hanoi, the Asian Development Bank (ADB) announced the 2012 Asian Development Outlook Update Report, including Vietnam. In this update, ADB forecasts that Vietnam's GDP growth in 2012 will decrease to 5.1% before increasing to 5.7% in 2013.

Previously, in April this year, ADB predicted that Vietnam's GDP growth this year could reach 5.7% and would increase to 6.2% in 2013.

Regarding inflation, ADB forecasts that by the end of 2012, Vietnam's national inflation will be 7% before increasing to 9.4% by the end of 2013. The average inflation rate this year will be 9.1%. However, ADB also noted that economic growth is likely to be influenced by the progress in resolving vulnerabilities in the financial sector.

Press conference to update Asia's development outlook 2012. Photo: NP

Recently, according to updated data from the General Statistics Office, the country's GDP growth in the first nine months of the year is estimated to have increased by 4.73% compared to the same period last year, lower than the 5.77% increase in the same period in 2011. Although the GDP growth rate of 5.35% in the third quarter was "slightly" higher than that of the first quarter, the achieved level still did not meet expectations, lower than the estimate previously given by the Ministry of Planning and Investment, in the range of 5.5-5.6%. Thus, it is likely that the growth target of 6-6.5% for the whole year will not be achieved.

In this report, ADB also reiterated that the Government has responded to previous recessions with anti-crisis policies, thereby attempting to restore growth to achieve the target, but often accompanied by inflation and delays in financial and business sector reforms.

At the same time, efforts to boost economic growth in the near term may distract the government from addressing structural obstacles to long-term growth, such as weaknesses in the financial system, inefficient state-owned enterprises, power shortages, and other constraints.

Assuming moderate policy easing over the forecast period, ADB expects economic activity to improve in the second half of 2012, supported by policies implemented earlier in the year and a trend toward accelerated budget disbursement later in the year.

(According to the Communist Party of Vietnam) -LT