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ADB upgrades Asian growth outlook while leaving Vietnam's unchanged

Released at: 11:14, 20/07/2017

ADB upgrades Asian growth outlook while leaving Vietnam's unchanged

Source: ADB

Latest report notes slowdown in industry and construction behind bank's forecast for GDP growth staying as is.

by Linh San

Economic growth prospects in developing Asia for 2017 have improved on the back of stronger-than-expected export demand in the first quarter of this year, according to a new Asian Development Bank (ADB) report. 

In a supplement to its Asian Development Outlook 2017 report, ADB upgraded its growth outlook in the region from 5.7 per cent to 5.9 per cent in 2017 and from 5.7 per cent to 5.8 per cent for 2018. The smaller uptick in the 2018 outlook reflects a cautious view on the sustainability of this export push. 

In Southeast Asia, however, its growth outlook remains at 4.8 per cent for 2017 and 5 per cent for 2018 despite revisions for four of its economies. High growth in Malaysia, the Philippines, and Singapore is dampened somewhat by disappointing growth in Brunei Darussalam. Robust domestic demand, particularly private consumption and investment, will continue to support economies in the region. 

Higher public investment boosted first quarter growth in the Philippines and Thailand, while private investment was strong in Malaysia and Vietnam. Exports rebounded in Indonesia, the Philippines, Malaysia, and Vietnam but the growth outlook for Vietnam remains at 6.5 per cent for 2017 and 6.7 per cent for 2018.

An unexpected decline in mining and quarrying output dragged Vietnam’s GDP growth lower to 5.1 per cent in the first quarter of 2017 from 5.5 per cent in the same quarter of 2016. Industry and construction expanded by only 4.2 per cent, well below 7.2 per cent growth in the same period of last year. 

Other sectors remained strong. Services recorded higher growth than a year earlier, coming in at 6.5 per cent against 6 per cent in the first quarter of 2016. As expected, agriculture recovered to 2 per cent growth from a 1.3 per cent contraction in the same period last year. 

Foreign direct investment into Vietnam continues to increase, with disbursements by the end of the first quarter estimated at $2.7 billion, up 4 per cent against the same time last year and accounting for 6.5 per cent of GDP. The new report retains the growth forecast at 6.5 per cent for 2017 and 6.7 per cent for 2018. These will be revisited, however, if the industry and construction sector remains sluggish. 

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