Vietnam’s growth ‘below potential’, says World Bank

8 Jul 14
Vietnam’s macroeconomic situation continues to stabilise but growth remains below potential and rising inequality is a concern, the World Bank said today.

Although gross domestic product is estimated to grow at 5.4% this year, higher than many other countries in the region, it is still below Vietnam’s potential, the Taking Stock report said.

‘In the short run, the subdued economic growth is linked to soft domestic demand. But longer-term prospects will depend on whether Vietnam can quickly address structural problems that can enhance the economic efficiency and competitiveness of the country,’ said Victoria Kwakwa, World Bank country director for Vietnam.

Among the risks to growth are slow progress reforming the banking system and state-owned enterprises, which could result in large contingent liabilities for the public sector and bring public debt to an unsustainable level.

Rising inequality is also a concern, the bank said, noting some ‘substantial differences’ in economic conditions by geography and ethnic group as well as significant inequality of opportunity. Children from poor households, for example, are far less likely to attend secondary school and have access to sanitation facilities and healthcare.

‘Popular concerns about inequality and demand for policy responses is likely to grow over time as more Vietnamese move to cities and are exposed to visible differences in welfare,’ said report author Gabriel Demombynes.

‘There is already substantial demand for redistributive social policy to narrow inequalities in Vietnam; this demand is likely to persist and to rise as Vietnam continues to urbanise.’

Did you enjoy this article?

Related articles

Have your say


CIPFA latest

Most popular

Most commented

Events & webinars