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Vietnam to join region in economic slowdown: World Bank

By Dat Nguyen   April 26, 2019 | 05:02 am PT
Vietnam to join region in economic slowdown: World Bank
Vietnam might have to deal with the impact of automation on jobs as it has relied low labor costs for years. Photo by Reuters/Kham
Vietnam’s GDP growth rate is projected to fall to 6.6 percent this year, the World Bank said.

The decline from the decade-high 7.1 percent last year is due to credit tightening, slower private consumption and weaker external demand, it said in a recent report.

This is in line with declining year-on-year growth of 0.3 percentage points in developing countries in the East Asia and Pacific (EAP) region, which consists of 22 countries.

Other countries in the region are also expected to see lackluster growth. Thailand’s rate will decrease from 4.1 percent last year to 3.8 percent while those of Indonesia and Malaysia will remain steady.

The slower growth reflects global headwinds and a continued gradual policy-guided slowdown in China, the report said. China’s growth is set to fall from 6.6 percent last year to 6.2 percent this year and next year.

The World Bank also warned of possible risks Vietnam would have to face this year. Domestically, a slowdown in the restructuring of state-owned enterprises and the banking sector could adversely impact the financial situation, undermine growth prospects and create public sector liabilities, it warned.

A continued slowdown in public investment could undermine long-term development objectives, it pointed out.

Vietnam’s economy also remains susceptible to global volatility, given its high trade openness and relatively limited fiscal and monetary policy buffers, it said.

The country might have to deal with the impact of automation on jobs as it has relied on low labor costs to break into global markets by taking on repetitive and labor-intensive tasks, it said.

It forecast Vietnam’s inflation rate to rise from 3.5 percent last year to 4 percent this year, the same as the government’s target.

Public debt would fall from 57.6 percent of GDP last year to 57.2 percent this year and to 56.9 percent in 2021, it added.

The government targets economic growth of 6.6-6.8 percent this year.

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