Vietnam’s 2016 GDP growth revised down to 6.2 pct: World Bank

By An Hong, Lam Le April 10, 2016 | 08:02 pm PT

The World Bank has revised down its forecast for Vietnam’s annual economic growth for 2016 to 6.2 percent from previous estimate of 6.5 percent, said Sandeep Mahajan, lead economist of World Bank office in Hanoi on Monday.

According to World Bank Chief Economist Sandeep Mahajan, the prolonged drought and salinity in the Mekong Delta and weaker global demand are the main reasons for the revision.

Vietnam's worst drought in nearly 100 years has taken a heavy toll on its agriculture production as the agricultural growth has so far been negative year on year.

However, Vietnam is still "one of the strongest perfomers in the world" amid the current global slowdown, said Mahajan.

Concerning the country's public debt which are now approaching around 65 percent of the GDP, the World Bank's economist pointed out that there should be no significant cause for concern as Vietnam’s “debt level is perfectly sustainable”. The country’s annual liable interest payment is only under two percent of GDP. Besides, almost half of the Vietnam's foreign debts are from preferential loans with low interest rates, hence the country "can easily service its debts," said Mahajan.

He also suggested Vietnam "think carefully" dealing with public debts since an increase in public debts would make the debt servicing funds increase, and that would "crowd out resources" for education, health care, other socially-oriented projects.

Compared to the World Bank’s 2016 growth forecast of 6.3 percent for developing nations of East Asia, Vietnam slightly underperforms. However, together with the Philippines, Vietnam has strongest growth prospects among large developing Southeast Asian economies.