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World Bank upbeat on economy
Viet Nam's robust economic recovery from the global crisis has experts optimistic about next year's prospects.
"We remain cautiously optimistic because of the risks in the foreign exchange and financial sectors," Victoria Kwakwa, World Bank Country Director told local businessmen and members of the Indian Business Chamber of Commerce (Incham) at a seminar yesterday.
Despite the recent global economic downturn, the country had become a lower middle income country, changing its domestic context. The per capita income crossed the $1,000 mark last year, she noted.
"It was a very short time to achieve remarkable success in economic performance and we are proud to be associated with that success," Kwakwa said.
Viet Nam's rapid economic growth had been accompanied by a remarkable reduction in poverty and general well-being of its citizens, she said.
With its globally competitive low-wage manufacturing and commodity producing base, FDI commitments clearly received a boost from Viet Nam's accession to the WTO. This situation would continue in the foreseeable future as a lot of capital is coming in now from other parts of the world, a much higher inflow than expected, she said.
Apart from the GDP growth of 5.5 per cent in 2009, the nation's economy had recovered quite rapidly from the global economic crisis and the real GDP was expected to exceed at least 6.5 per cent in 2010.
"In the regional context, Viet Nam has done much better than several countries," Kwakwa said
Seck Yee Chung, partner with the Baker&McKenzie law firm, also felt the economic prospects were bright for next year. He estimated a GDP growth of 6.7 per cent for this year and at least 7.5 per cent for next year. Export turnover would increase by 20 per cent while growth in imports would be kept at less than 10 per cent, he said.
Inflation concerns
Kwakwa said inflation was still a problem that Viet Nam is facing, increasing from 6.5 per cent in 2009 to 8 – 8.5 per cent in 2010.
The annual inflation rate for 2010 is likely to remain below 10 per cent. It was expected to decline but would still remain high at around 7 per cent in 2011, she said. Inflation outlook would be affected by global changes in commodity and food prices as well as monetary and fiscal policies of the government.
Total public debt has crossed 50 per cent of the GDP. The latest Debt Sustainability Analysis (IMF, 2010) indicates however that Viet Nam remains at low risk of external debt distress, though this analysis does not include debts of SOEs.
Arun Jyoti Duggal, Country Manager of ONGC Videsh Ltd, said investment in the country was still not free from pitfalls. The challenges faced by investors in the oil and gas sector were mainly policy and technology related, he said. These included amending the State-owned enterprise law, changing pricing policies and the resolution of territorial claims in Vietnamese offshore waters, he added.
"Despite these odds, to me it appears that Viet Nam is on the verge of taking off to the next orbit of development," Duggal said.
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