“Economically speaking, Vietnam is the star of Southeast Asia” in terms of economic growth, said Mr Ayumi Konishi, Country Director of ADB’s Vietnam Resident Mission in launching the Asian Development Outlook 2006 Update in Hanoi on September 6.

The Vietnamese economy is expected to see vigorous growth, underpinned by improvements in the country’s business climate and its expected membership in the World Trade Organisations, the Asian Development Bank says in a major report released today.

“Growth in private investment, strong consumption and robust exports are driving a dynamic economy,” Mr Konishi said. The Asian Development Outlook 2006 Update (ADO Update) forecasts the economy will grow 8.0% in fiscal year 2007, up from 7.8% growth this year.

In Vietnam, ADO Update noted that the implementation of commitments related to the Association of Southeast Asian Nations Free Trade Area and expected WTO accession will provide opportunities for further export growth by allowing the country greater access to international markets.

In addition, surging exports are helping to drive the country’s strong growth. Merchandise exports for the first half of the year jumped 28.8% to 18.8 billion. As a net oil exporter, the country also benefits from rising global oil prices. Exports of textiles and clothing were also strong.

In 2007, exports are projected to increase by about 18%, outpacing import growth and narrowing the country’s trade deficit. Strong remittance inflows are expected to help turn the current account into a slight surplus.

The inflation forecast has been revised up to 8.3% in part because of rises in administered fuel prices to reduce the cost of fuel subsidies. Rising prices for food, housing construction materials and transport have also contributed to the increase in inflation this year.

In 2007, inflation will continue to feel upward pressure from expansionary macroeconomic policies, continued strong domestic demand, and likely wage rises in both public and private sectors.

One challenge facing the economy is the reduction of corruption and this has been recognised by the Government of Vietnam, which has stepped up its efforts on this issue.

ADO Update forecasts overall growth for the 43 countries of developing Asia of 7.7% in 2006, up from its 7.2% forecast in April.

Source: Nhan Dan