Vietnam’s macroeconomic stability continues to improve but its economic growth remains modest and fails to match potential, said the World Bank (WB) in a report released on July 8.

According to the WB Update on Vietnam’s Economic Development, Vietnam’s economy will grow 5.4 percent this year thanks to stable foreign direct investment inflows and strong manufacturing export.

However, the domestic demand remains weak as the private sector’s confidence is not strong enough and commercial banks’ bad debts are still high, it said, adding that Vietnam’s economy is facing numerous challenges in competitiveness.

WB Country Director in Vietnam Victoria Kwakwa

The bank emphasised the need for more attention to the restructuring of State-owned enterprises and the banking system while removing barriers for private investment.

Speaking at the launch ceremony, WB Country Director in Vietnam Victoria Kwakwa said that Vietnam’s projected 5.4 percent economic growth is still higher than that of many countries in the region and the world. However, it does not match the country’s potential.

In the short term, Vietnam’s growth will continue at a modest pace due to weak domestic demand, she forecast.

Regarding the possible impact of China’s illegal placement of its oil rig in Vietnam’s waters on the country’s economic growth prospect, the WB representative said that trade between Vietnam and China is still normal although the number of Chinese visitors to Vietnam has dropped in recent time.

The Vietnamese Government has taken timely measures to assist businesses affected by disturbances caused during workers’ rallies against China’s violations of Vietnam’s sovereignty. This shows that the Government is really attentive to ensuring the safety for foreign investors, she affirmed.

Source: VNA