Vietnam’s growth momentum has moderated since the beginning of the year but the outlook remains positive, according to Taking Stock, the World Bank’s bi-annual economic report on Vietnam released in Hanoi on July 1.

Recent slower growth reflected the repercussions of unfavorable external factors on key economic sectors. The outbreak of African swine fever and a decline in international prices dampened agricultural outputs while weaker external demand moderated growth of the export-oriented manufacturing sector.

Vietnam’s outlook, however, remains positive. Real GDP growth for 2019 is forecast to decelerate to 6.6 per cent, driven by weaker external demand and continued tightening of credit and fiscal policies. Inflation indexes are meant to be kept below the official inflation target of 4 per cent.

Risks have continued to intensify, reflecting heightened global uncertainty amid re-escalation of trade tensions and rising financial volatility. Those external risks are compounded by domestic vulnerabilities, including potential slippages in fiscal consolidation, State-owned enterprise (SOE) reform, and banking sector reform, which could undermine investor sentiment and growth prospects.

“Vietnam needs to prepare to adjust its macroeconomic policies in case some of these risks materialize and lead to a deeper than expected downturn,” said Mr. Ousmane Dione, World Bank Country Director for Vietnam. “Vietnam will also continue to push for deeper structural reforms, enhance export competitiveness, and further deepen trade integration through bilateral and regional agreements.”

The special section of this edition takes a close look at the development of Vietnam’s tourism industry - the country’s single largest services export and contributing 8 per cent of GDP in 2017. It writes that the sector’s rapid expansion has brought it to a tipping point in its development, where continued growth, if not well managed, could have adverse economic, environmental, and social impacts.

The report suggests certain measures to ensure the long-term sustainability of the sector. Key priorities include: (i) enhancing coordination of destination planning and product development, (ii) diversifying tourism products and visitor source markets, (iii) developing tourism workforce skills, (iv) strengthening local tourism value chain linkages, (v) improving visitor flow management, (vi) boosting destination infrastructure capacity and quality, and (vii) protecting environmental and cultural assets.