ADB raises forecast to Vietnam

The bank has launched its Asian Development Outlook 2010 Update increasing its growth forecast for Vietnam in 2010 from 6.5 to 6.7 per cent, and in 2011 from 6.8 per cent to 7.0 per cent.

“Vietnam has consolidated its macroeconomic stability and as a result we are making upward adjustments in our growth forecast for both 2010 and 2011,” said Ayumi Konishi, ADB country director for Vietnam.

The adjustments come after Vietnam’s economy enjoyed good growth from January to September. According to the General Statistics Office, the gross domestic product expanded 6.52 per cent year-on-year. The Ministry of Planning and Investment also forecasted that the economy will grow around 6.7 per cent year-on-year this year, 0.2 per cent higher than previously targeted.

Though Vietnamese government has reduced its stimulus measures since the end of 2009, ADB said private investment would contribute to push the economic growth in the country, thanks to recoveries in world trade and financial conditions. Meanwhile, the improvement in investment environment is encouraging private investment.

The recent upgrading of Vietnam’s ranking in Global Competitiveness Index, complied by World Economic Forum, from 75th to 59th out of 139 countries and its ranking in the Forum Enabling Trade Index, from 89th to 75th out of 125 economies has proved the strong improvement of the country’s business environment.

Apart from the investment climate improvement, Vietnam is benefiting substantially from the rebound in world trade, which is projected to continue through 2010 at nearly the same pace as this year, according to ADB.

The growth in the country’s merchandise exports was running at about 30 per cent in July and August, supporting in industry and in agriculture.

The stabilisation of the economy has contributed to an improvement in the external and foreign reserves positions. The current account deficit, as a ratio to gross domestic, is forecast to narrow in the forecast period due to an improving trade account, inflows of remittances and the recovery in tourism. ADB forecasts the deficit will be around 7.5 per cent in 2010 and 5.4 per cent in 2011.

“The overall balance of payments is expected to continue improving, supported by foreign direct investment attracted by the expanding economy as well as by capital inflows. Foreign reserves are seen increasing modestly to more comfortable levels,” ADB said.