Vietnam Expects Faster Growth in 2015




Vietnam Is Targeting GDP Growth of 6.2% for 2015


HANOI—Vietnam’s prime minister said Monday he expects the country’s economy to expand at a quicker pace in 2015 as strong exports continue to drive growth.


The country is targeting gross domestic product growth of 6.2% for 2015, faster than projected growth of 5.8% for this year, Prime Minister Nguyen Tan Dung said during the opening session of the country’s National Assembly. Mr. Dung said exports in the first nine months of this year grew 14.4% while banks’ lending interest rates have fallen by around two percentage point year-to-date.


Vietnam has been trying to revive its economic growth by boosting exports to offset weak domestic demand. The government has also cut interest rates in an effort to jump-start business activity.


“Vietnam will try to maintain macroeconomic stability, continue its economic reform and improve its productivity and competitiveness,” Mr. Dung said. However, he said that economic reform is taking place slowly and the country faces geopolitical risks, such as territorial disputes in the South China Sea.


“Our country is facing numerous difficulties and challenges in 2015, so the targets set for next year are very challenging,” Mr. Dung said.


He said the government is expected to meet this year’s economic growth target of 5.8%. Government data showed GDP in the first nine months of this year grew 5.62% from a year earlier. Growth in the third quarter was 6.19%, quickening from 5.42% in the second quarter and 5.09% in the first quarter.


ANZ said last week it is skeptical about the government’s reported faster-than expected growth in the third quarter, adding that it maintains its forecast for 2014 economic growth at 5.6%. “Most domestic indicators are pointing to weaker growth prints compared to expansion over the same period last year ... and the weak inflation profile is a clear indicator that domestic demand is failing to gain traction,” it said.


Vietnam is aiming to keep inflation in 2015 at 5.0%, Mr. Dung said Monday, noting that this year’s inflation is expected to be below 5.0%, the lowest in decades.


Vo Tri Thanh, an economist with the government’s Central Institute of Economic Management, said an economic growth target of 6.2% for next year appears to be very challenging given the difficulties the economy is facing.


Growth has slowed significantly over recent years due to weak demand and high levels of bad debt in the banking system. Annual growth averaged 5.5% between 2011 and 2013 compared with 7.3% average GDP growth between 2001 and 2010.


Mr. Dung said the government will give more power to the Vietnam Asset Management Company, set up by the central bank last year, to help it better deal with nonperforming loans in the banking system. He said Vietnam is aiming to bring down the ratio of bad debt to bank loans to 3% by the end of 2015. The central bank said the ratio was 4.17% at the end of July.


“I think the most important thing is to continue restructuring the economy and revive investment sentiment,” Mr.Thanh said, adding that cleaning up bad debt in the banking system must remain a top priority.

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