Report shows Vietnam's economic growth is on the increase.
Vietnam’s economic growth is expected to improve from 5.4 per cent in 2013 to 5.6 per cent in 2014, with GDP growth rising by up to 6.2 per cent (year-on-year) in the third quarter, contributing to an overall growth rate of 5.6 per cent for the first nine months of 2014.
The figures were contained in the Taking Stock Report released by the World Bank in Vietnam on December 2. The report also showed that each of the major sectors, except services, recorded faster growth in the nine months than in the same period last year. The Industrial Production Index is estimated to have increased by 6.7 per cent thanks to a strong rebound in the third quarter. The manufacturing sector is expected to continue benefiting from rising foreign investment and growing demand from Vietnam’s key trading partners, especially the United States.
In addition, growth in agriculture has picked up. Vietnam is forecast to produce 45 million tons of paddy rice this year, up almost 800,000 tons over 2013. However, growth in services has remained flat, at around 6 per cent, throughout 2014 thus far.
At the press conference for the report’s release, Ms. Victoria Kwakwa, World Bank Country Director for Vietnam, indicated that Vietnam’s potential for much more rapid growth can only be realized if substantial progress is made in addressing distortions such as in the State enterprise and banking sectors, which tax the economy’s efficiency and productivity. “Stepping up this reform agenda and strengthening the business environment are critical for moving forward,” she added.
The report also found that underlying the broad pattern of economic recovery, the performances of foreign-invested and domestic firms remain dichotomous. The foreign-invested sector continues to be a significant source of growth, while the domestic private sector remains subdued, as reflected in the rising number of domestically-owned businesses that have closed or suspended operations.