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IMF: Growth at 6.3% in 2017 & 2018

Released at: 14:36, 14/10/2017

IMF: Growth at 6.3% in 2017 & 2018

Forecast in latest regional assessment remains unchanged from July.

by Linh San

The International Monetary Fund (IMF) forecast in its latest regional assessment that Vietnam’s growth will be 6.3 per cent in both 2017 and 2018. The forecast remains unchanged from that made in its World Economic Outlook Update released in July.

Earlier this month, the World Bank also forecast that Vietnam’s economy would grow by around 6.3 per cent this year thanks to strong export-led manufacturing sectors and sharply increasing domestic demand. 

Meanwhile, according to the General Statistics Office (GSO), in the June-August period, GDP grew 7.46 per cent, driven by a year-on-year rise of 12.77 per cent in the processing and manufacturing sector. Nine-month growth was 6.4 per cent year-on-year. 

According to the IMF, Asia continues to lead the global economy, with growth projected at 5.6 per cent this year and 5.5 per cent in 2018. The strength of many economies in the region provides an opportunity to pursue key reforms that can amplify and accelerate their beneficial effects, boosting living standards for all. 

“Asia is in a favorable position as growth momentum continues to be strong,” said Mr. Changyong Rhee, Director of the IMF’s Asia and Pacific Department. “It is premature, however, to judge how long this upswing will last. The tailwinds in the region are an opportunity to pass structural reforms and address vulnerabilities.”

The IMF also said that capital inflows to the Asia-Pacific region continued to be sizable in the first half of 2017, and financial conditions are expected to remain supportive. Inflation has been weaker than projected, partly on account of lower commodity prices, and projections have been revised downwards in most countries. 

The region is thus currently in a favorable position, but how long this will last is uncertain. Near-term risks to the regional outlook are broadly balanced, but medium-term risks are skewed to the downside. Key downside risks include geopolitical tensions, sudden capital outflows, a shift toward inward-looking policies, policy uncertainty, and a sharp adjustment in China.

In addition, the region continues to face serious longer-term challenges including population aging and lagging productivity. Overall, the favorable combination of circumstances provides a window of opportunity to pursue difficult structural reforms to boost growth and make it more inclusive, while addressing imbalances and risks. 

Financial conditions in Asia are also favorable thanks to sizeable capital inflows in the first half of 2017.

While the growth outlook has been revised upward, inflation has been marked downward to 2.3 per cent in 2017 - 0.6 percentage points lower than previous projections in April - mainly because of lower commodity prices and appreciated local currencies.

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