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Vietnam's economic outlook broadly favorable: IMF (23/11)
06/08/2010 - 29 Lượt xem
The IMF, in its annual economic outlook for Vietnam, forecast growth between 8 percent and 8.25 percent in 2007/08 backed by strong demand, investment and private consumption.
"The near-term outlook remains broadly favorable, and Vietnam has good prospects for sustained growth and poverty reduction over the medium term, provided that the government can take timely action to rein in demand pressures," the IMF said.
The IMF said Vietnam's currency, which is pegged to the US dollar, is aligned with medium-term fundamentals and welcomed plans by the authorities to introduce greater exchange rate flexibility.
"Greater flexibility could facilitate disinflation and de-dollarization over the medium term, while reducing the need for intervention and sterilization," the IMF said. "It would also create an incentive to manage exchange rate risks effectively, and protect external stability in the event of an abrupt reversal of capital inflows."
Turning to potential risks, the IMF cautioned that large foreign exchange inflows could prevent an effective tightening of monetary policy and continued rapid credit growth, together with a weak regulatory environment, could threaten domestic financial stability.
It also said that large increases in public wages and pensions and lending to state-owned enterprises could add to inflationary pressures and raise public debt.
"Insufficient improvement in banking sector and SOE governance (state-owned enterprises) and continued state-sector dominance of key industries could pose additional risks, as sub-optimal lending and investment by these sectors would weaken the efficiency of investment and possibly place additional future burdens on the budget," the IMF added.
Source: Reuters.
