Vietnam's economy to expand at moderate pace: World Bank

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     Containers waiting to be exported at a port in Ho Chi Minh City. Photo: Diep Duc Minh

Vietnam's economy is projected to grow at a moderate rate of 5.3 percent in 2013 and 5.4 percent in 2014 as sluggish structural reforms in banking and state-owned business sectors are still weakening the growth, World Bank says.

The Washington-based development bank's latest forecasts for Vietnam posted some revisions from its earlier projections. In April it said the country's GDP growth will reach 5.2 percent in 2013 and 5.7 percent in 2014. Vietnam's economy grew by 5.03 percent in 2012, the lowest level since 1999.

While Vietnam's macroeconomic conditions have improved for the past two years with falling inflation, current account surplus, stable exchange rate, and increased reserves, the GDP growth will not be high in the medium term due to unsolved problems in banking and state owned enterprises sectors, World Bank said in the report released Monday.

The bank forecasts Vietnam's inflation to increase from 6.8 percent in 2012 to 8.8 percent in 2013 on speculation that the gocernment will continue to ease monetary policies to boost the economic growth. The country's CPI will drop to 7.4 percent in 2014, the bank estimates.

As for the East Asia and Pacific section, the World Bank's latest report says developing East Asia is expanding at a slower pace as China shifts from an export-oriented economy and focuses on domestic demand.

Growth in larger middle income countries including Indonesia, Malaysia, and Thailand is also softening in light of lower investment, lower global commodity prices and lower than expected growth of exports.

According to the report, the growth forecast for developing countries in the region is 7.1 percent for 2013, and 7.2 percent for 2014. While this is a slight downward revision from World Bank projections in April 2013, developing East Asia is leading other regions.

"East Asia Pacific continues to be the engine driving the global economy, contributing 40 percent of the world's GDP growth - more than any other region. With overall global growth accelerating, now is the time for developing economies to make structural and policy reforms to sustain growth, reduce poverty and improve the lives of the poor and vulnerable," said Axel van Trotsenburg, World Bank East Asia and Pacific Regional Vice President.

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