Thanks to robust domestic demand and export-oriented manufacturing, Vietnam’s medium-term outlook remains favorable, with GDP expected to expand by 6% this year. Vietnam’s growth was accompanied by low inflation and widening current account surplus. Risks that could adversely affect medium term prospects include continuing delays in implementation of structural and fiscal reforms.
“Vietnam’s macroeconomic stability creates a favorable environment for policy makers to accelerate structural reforms, which is crucial as the country moves toward a more productivity-led growth model,” said Ousmane Dione, World Bank Country Director for Vietnam. “The adoption of the 2016-2020 economic restructuring plan by National Assembly in November, for instance, would address some of the emerging obstacles to growth in the economy.”
The economy’s recent performance owes in part to rapid credit growth and an accommodative fiscal stance, which may support growth in the short term but amplify existing medium-term financial and fiscal risks, and exacerbate existing macroeconomic and financial vulnerabilities.
Risks that could adversely affect medium term prospects include continuing delays in implementation of structural and fiscal reforms.
The agricultural sector can bring about more economic value and better livelihoods for farmers and consumers, using less natural and human resources but without degrading the environment. The government will need to lead less yet facilitate more to transform Vietnam’s agriculture and agro-food system.