World Bank attributes strong growth to non-oil exports, greater investment
|Freight at Qui Nhon port in the central province of Binh Dinh. — VNA/VNS Photo Pham Biet|
HA NOI — Viet Nam’s economic growth remains strong in 2007 with the industry and service sectors recording high growth rates, the World Bank’s latest East Asia and Pacific updates revealed yesterday.
The update attributed the 8.3 per cent year-on-year growth rate over the first nine months to strong non-oil exports and increased investment and consumption.
Although there was a 10 per cent decline in crude oil exports due to production capacity constraints, Viet Nam’s export earnings continue to grow rapidly at 19.4 per cent year-on-year.
“There has been a strong pick-up in exports of footwear, garments, agricultural products and seafood (even though seafood and aquaculture exports have faced food safety concerns related to antibiotic residues and environmental problems in the breeding areas),” the report explains.
The United States is Viet Nam’s largest export market, absorbing nearly a fifth of total exports, followed by the EU, ASEAN and Japan.
Regarding the high trade deficit Viet Nam has encountered this year, the report offers something positive: “The balance of payments remains sound, with the current account deficit largely financed by non-debt creating FDI inflows, official development assistance and private remittances.”
“In addition, the high levels of commitments mean that actual inflows could be accelerated if there were concerted efforts to ease implementation constraints.”
Viet Nam’s current account deficit is expected to reach 3 per cent of the GDP this year, up from 0.3 per cent last year.
The report remarked on Viet Nam’s consumption and investment figures in 2007 drawing attention to a decrease in shares of the state sector.
However, the World Bank noticed the slow preparation and implementation of public investment projects and that disbursements from the capital state budget remain low, given the strong increase in investment by foreign companies and the domestic private sector.
Regarding Viet Nam’s stock market, the report says: “Whether the market is overvalued remains a hotly debated issue, but fears of a crash have receded.”
The report also noticed that Vietnamese stock market capitalisation remains below that of India or China. Earnings of listed companies have actually been increasing very rapidly.
The downtrend of the market since March this year is also noted by the report: “Given the downtrend, capital control measures that had been mulled earlier appear to have been shelved for now.
“However, stronger disclosure requirements, better investor protection and higher caps for foreign investors may be needed to keep up the momentum,” the report concluded.
The report offers a positive perspective on East Asian economies, stating that they are likely to remain robust in 2008 despite growing concerns about the US sub-prime crisis and increasing global oil prices.
The report finds that for the first time, the number of poor people living below $2 a day in East Asia has fallen below 500 million – down from 1 billion in 1990. — VNS
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