Ratings firms see potential in Vietnam

Trading Economics, which provides information on 196 countries, forecast last week that Vietnam’s economy would grow 6.3% in this year’s first quarter, 6.5% in the second quarter, 6.8% in the third quarter, and 6.7% in the fourth quarter.

On average, the economy is expected to grow 6.58% over the year.

In the long term, Vietnam’s GDP growth rate is projects to hover around 6.9% in 2020, according to the firm’s econometric models.

‘Many international organizations and ranking firms are quite upbeat about Vietnam’s economic prospects. Over the pát two years, Vietnam’s economy has been recovering strongly’, said Tran Dinh Thien, head of the Vietnam Economic Institute.

‘Many international organizations have projected that the economy may grow at least 6.6% this year, with a maximum rate of 7%’, Thien affirmed.

According to an institute survey, 70% of foreign investors want to come to Vietnam to invest over the next few years, thanks to the country’s political stability and improved business climate.

“While many nations in the world are expected to see either low or negative growth this year, Vietnam’s growth will likely be far higher,’ Thien said.

According to a Bloomberg, survey on the world’s worst-performing economies in 2016, Vietnam could gorw 6.6% in 2016. This rate is just behind India’s predicted 7.4% rate, and ranked second in the world.

With such a high growth rate, Vietnam may be the best economic performer in Southeast Asia, followed by the Philippines (6%).

One of the main reasons Vietnam is receiving such optimistic forecasts, according to Thien, is the country’s participation in a raft of free trade agreements (FTAs), notably Trans-pacific Partnership.

According to the World Bank, which projects that Vietnam’s growth rate for the 2016-2018 period could be 6.3%-far higher than many regional nations, Vietnam’s economy is doing well. After a weak performance over the past few years, the economic recovery is taking hold, thanks to resilient domestic demand and a strong performance by the export-oriented manufacturing sector.

In fact, Vietnam’s growth has annually averaged at 6% over the last five years, compared to a regional average of only 5.6%, almost doubling the size of the economy to about US$200 billion during this period.

However, Jonathan Dunn, resident representative of the International Monetary Fund in Vietnam, said that despite Vietnam’s huge growth potential, much remained to be done foe the country to sustain higher growth.

For example, he said, faster and qualitatively better reform implementation would improve confidence, reduce fiscal risks stemming from the banking and state-owned enterprise sectors, and boost growth-especially in the domestic export sector-to provide jobs and opportunities for Vietnam’s fast-growing and motivated workforce.

‘A healthy and well-managed banking system will support growth through intermediation to provide resources to the most productive sectors’, Dunn suggested.