Vietnam's growth forecast lowered by International Monetary Fund

By VnExpress   July 6, 2017 | 03:34 pm GMT+7
Vietnam's growth forecast lowered by International Monetary Fund
Laborers work at TAL garment factory in Vinh Phuc province, Vietnam May 23, 2017. Picture taken May 23, 2017. Photo by Reuters/Kham

A previous estimate of 6.5 percent has been slashed to 6.3 percent on the back of an underperforming oil industry.

Vietnam’s growth outlook has been cut to 6.3 percent this year, the International Monetary Fund (IMF) said Thursday, lowering its forecast from the previously projected 6.5 percent.

The country's oil sector has underperformed in the first half of this year, according to the IMF, but momentum has been maintained in the manufacturing and foreign direct investment sectors, while agricultural production has bounced back.

The IMF said that Vietnam’s economy could benefit from what it described as an “ambitious reform agenda” outlined by the leadership, which could raise growth potential and increase resilience.

Bilateral trade agreements such as the E.U.-Vietnam FTA could also help boost exports and foreign direct investment.

Based on the fund's calculations, inflation this year will stabilize at around 5 percent, and Vietnam’s current account surplus is projected to decline as imports strengthen.

The fund also noted that high public debt, tighter global financial conditions, rising protectionism and the collapse of the U.S.-led Trans Pacific Partnership could hinder Vietnam’s near-term growth prospects.

The Washington-based financial institution also projected that Vietnam’s economy will expand by 6.3 percent in 2018.

In contrast, the Asian Development Bank adjusted its forecast for Vietnam’s growth up in April to 6.5 percent for this year, from a previous estimate of 6.3 percent.