This was said by the Asian Development Bank (ADB) in a major report released in Hanoi on September 17, 2007.

The report assessed that Vietnam’s economy has grown strongly over the past few months in spite of not achieving any miracles after joining the WTO (World Trade Organization) in January this year.

The Asian Development Banks outlook for 2007 (ADO), forecast Asia’s growth in 2007 at 7.6 percent in March this year and 8.3 percent by the end of the year. As for Vietnam, its growth accelerated in the January-June period to 7.9 percent, which is a half percentage point faster than a year ago.

According to the report, nearly all the economic expansion in Vietnam comes from industry and services and the dynamic private sector is noted with an expansion of 20.5 percent, more than double the rate of state enterprises.

Among the sub-sectors, manufacturing grew by 12.4 percent but mining posting minimal growth after suffered from a 7.4 percent contraction in crude oil production because of a decline in output of the White Tiger oilfield, the biggest in Vietnam.

In terms of services, trade and finance grew by 10.4 percent and hotels and restaurants which benefited from buoyant consumption and increased tourism, rose by 12.7 percent.

On the demand side, strong investment and consumption were the main drivers of the economic expansion in Vietnam. Investment grew by 14 percent in the first half of the year, stimulated by Vietnam’s WTO accession and by improvements to the business environment. Much of the growth in investment is from the domestic private sector, whose share of overall investment increased to about 35 percent in the first half of 2007, up from 23 percent in the last 6 years.

The buoyant investment led to a steep 30.4 percent increase in imports in the first half of 2007 with the import of capital goods surging by 46.5 percent. Regarding exports, textiles and clothing increased by 25.5 percent in the first half of the year after the abolition of quotas, and wooden furniture exports also rose by 23 percent.

The report also said that Vietnam’s economic expansion is expected to accelerate to 8.5 percent in 2008, led by strong growth of two of its components – manufacturing and construction, industry is expected to grow by 10.6 percent in 2008. Services, spurred by consumption and tourism, as well as the gradual opening of some sectors to foreign participation, is projected to grow by 8.6 percent next year. Trade benefits from WTO accession are expected to keep export growth brisk in 2008 at 22 percent. As to inflation, the level is expected to be contained at 7.8 percent for 2007, and it is expected to be reduced further to 6.8 percent in 2008.

Mr. Ayumi Konishi, ADB Country Director to Vietnam, said that “those who have expected miracles from Vietnam’s WTO accession may feel differently, but the country indeed has been making a good progress in its economic development and reforms.” 

Source: CPV.