The World Bank’s (WB) chief economist in Vietnam, Martin Rama, said that Vietnam recorded a GDP growth of 3.1 percent in the first quarter and the WB believes that the country’s growth will be higher during the second and third.

According to a WB report on Vietnam’s economic situation, to be presented at the Informal Mid-term Consultative Group Meeting (CG) slated for June 8-9 in the Central Highlands province of Dak Lak, 2009 will be a gloomy year for the global economy, especially several developed countries in Asia.

However, newly emerging Asian economies still stand firm, with Vietnam recording a first quarter GDP growth of 3.1 percent compared with Singapore at minus 10.1 percent or Japan’s minus 15.2 percent, the report stated.

The WB said that the fall in the price of raw materials has led to the Vietnamese construction sector recovering strongly with a growth of 6.92 percent in the first three months and a two-digit growth expected for the whole year.

This is a good signal for the Vietnamese economy, said Rama, adding that other economic sectors have seen relatively satisfactory developments. The power sector expects to enjoy a growth of between 10-12 percent in the second quarter and 16 percent for the whole year.

The increasing demand for power shows that the economy will develop much more vigorously in the future, said Rama.

In addition, the domestic stock market has recently taken off with the Ho Chi Minh Stock Exchange’s VN-index increasing by 35 percent since the beginning of the year. The exchange is now amongst the markets showing the most rapid growth in the world.

Rama also praised the flexibility and dynamics of the Vietnamese economy. Compared with other economies in the world, Vietnam has several advantages such as a young population and an abundant and increasingly skilled labor force, with 1 million people joining it every year, he said, adding that this will help to increase the country’s GDP growth.

He also appreciated the Vietnamese government’s response to the world economic crisis during the first half of 2009 after coming up with various solutions such as tax exemptions and delay, interest rate subsidies and an increase in social spending.

However, the WB economist recommended that the government considers carefully an 8 billion USD stimulus package recently submitted to the National Assembly. The package is feasible but much too large, as it accounts for 8.3 percent of the country’s total GDP.

Source: VietNamNet/SGGP