ADB forecast 4.5% growth for Vietnam

Compiled by Thuy Hang

A day after the Vietnamese government lowered its 2009 economic growth forecast to 5 percent, the Asian Development Bank (ADB) issued a more subdued forecast of 4.5 percent economic growth.

In the 2009 Asian Development Outlook released Tuesday, the ADB reduced its forecast for Vietnam’s gross domestic product (GDP) growth from the 6.5 percent it forecast in September last year.

However, the ADB is expecting the Vietnamese economy to outpace average Asian growth of 3.4 percent this year.

The ADB forecast Vietnam’s budget deficit will widen to 9.8 percent of GDP, higher than the government’s own forecast of a deficit of 8 percent of GDP this year and last year’s deficit of 4.8 percent of GDP.

The ADB said an expected decline in oil revenue, lower corporate taxes and the cost of stimulus packages would all eat into the 2009 budget bottom line.

In its outlook report, the ADB said Vietnam’s lower interest rates and the fiscal stimulus measures already announced will support public consumption and domestically financed investment this year.

The Vietnamese economy is expected to recover next year, with GDP increasing to 6.5 percent, according to the report. In 2008, Vietnam’s economy expanded by 6.2 percent.

The ADB report said the country’s near-term economic prospects were clouded by an unusually high level of uncertainty, primarily because of the global economic downturn and any additional stimulus measures the Vietnamese government may adopt.

“Stimulus measures may well lift growth, but they are also likely to widen the fiscal and current account deficits and may stoke inflation,” the report said.

The Vietnamese economy is expected to recover next year, with GDP increasing to 6.5 percent

Asian Development Bank

ADB forecast Vietnam’s average annual inflation to slow to 4.0 percent this year from 23.0 percent last year.

The report said the global financial crisis and economic downturn were likely to reduce foreign direct investment and remittance inflows, as well as further crimp exports and foreign portfolio investment inflows.

The ADB said the government should focus on social welfare and support for small, medium-sized and export-oriented enterprises.

In December last year, the government announced a fiscal stimulus package of about US$1 billion. It later indicated that the size of the package could increase to $6 billion.

During January and February this year, the government approved several fiscal stimulus measures, including reduced corporate income tax rates for small and medium-sized enterprises and lower value-added tax on certain goods and services.

Source: Tuoi Tre

• World Bank revises forecast to 5.5% -22/04/2009
• Prime Minister lays out red carpet for Macau investors -22/04/2009
• PM calls for more investment from Hong Kong -22/04/2009
• Asia tourism reels as firms cut back business travel -22/04/2009
• Concrete to cut road costs -22/04/2009

• Vietnam’s central bank tipped to cut rates -22/04/2009
• Party leader meets Japanese Emperor -22/04/2009
• Leader lauds Japan for role in region -22/04/2009
• Private equity investors still keen on Vietnam -20/04/2009
• Vietnam PM reassures foreign investors -20/04/2009