This is the remark by the Asian Development Bank (ADB) at the press conference to announce the Asian Development Outlook 2013 (ADO) in Hanoi. According to the report, the economy stabilised in 2012, as previous policy tightening suppressed inflation and bolstered external accounts. Subdued economic growth prompted an easing of monetary policy last year, but lending was constrained by problems in the banks.
GDP growth in 2012 was the slowest in 13 years. Although low economic growth prompted authorities to ease up monetary policy, credit growth was restrained by financial health of banks. The economic recovery depends on banking reform and State-owned enterprise (SOE) reform, specifically the settlement of non-performing loans, the strengthening of banking sector, and speeding restructuring of State-owned enterprises.
GDP growth is forecast at 5.2 per cent in 2013, picking up to 5.6 per cent in 2014 if progress is made in strengthening the banking sector and recovery in major industrial economies gathers momentum in 2014. Inflation is seen easing to 7.5 per cent on average this year before quickening to 8.2 per cent in 2014. This view assumes reasonable weather for food production, a broadly stable dong exchange rate, and restrained policy stimulation.
The trade surplus is expected to climb to a record US$12.5 billion in 2013 and the current account surplus to increase further this year before easing in 2014 as imports accelerate in tandem with GDP growth.
Despite these concerns, Vietnam has remained an attractive investment destination in light of its growing working-age population and low labour costs. This is illustrated by an increase in FDI in the past 10 years.
Mr Tomoyuki Kimura, ADB Country Director for Vietnam, said “The government must take a strategic and selective approach towards state-owned enterprises restructuring as it is not possible to do everything at once. Some initial success and progress can spur further reform momentum.”
However, he said, as ASEAN integration in 2015 approaches, Vietnam faces increased competition for FDI in Southeast Asia, adding that sustaining FDI flows and maintain competitiveness will depend on successful implementation of structural reforms and improving the business environment more broadly.
Economic growth in the Asia Pacific region will pick up to 6.6 per cent in 2013 and reach 6.7 per cent in 2014. This is a distinct improvement on 2012, when growth stood at just 6.1 per cent. Southeast Asia was the only region with higher growth rate than in 2011 as it was driven by recovery in Thailand and increased public spending in the Philippines. ADB anticipates that this momentum will continue in 2013, with GDP growth in 2013 at 5.4 per cent and 5.7 per cent in 2014.
Quynh Anh
Vietnamese
