The World Bank Wednesday said Vietnam's economic growth will speed up this year but warned that the country, together with other Asian economies, is being affected by a decline in global trade.
"Economies in the East Asia and Pacific region are being affected in varying ways by the current difficult economic times," the World Bank said in its Global Economic Prospects report.
According to the bank, the countries in the region "are exceptionally open to world trade" and thus a more serious deterioration of conditions in high-income economies and a sharp decline in global trade could have serious implications for them.
"Despite the erstwhile continued growth of regional exports (excluding China), exporters in the Philippines, Malaysia, Indonesia, Thailand and Vietnam are vulnerable to slowing import demand growth in OECD economies," the report said.
The World Bank particularly warned Vietnam and some other economies like Cambodia and Laos that they could be "less well positioned" than the major countries of the region due to limited space for policy change and less reserves to stem financial disturbances.
"Vietnam's exports have expanded at double digit rates for some time, though this is likely to give way for all economies in the group over 2012-13," the bank said.
According to the report, inflation remains a concern for Vietnam. However, it noted that tightening of monetary policy is helping to reduce the country's macroeconomic instability gradually.
Vietnam's economy grew at 5.9 percent in 2011, compared to 6.78 percent in 2010. The economy may expand 6.8 percent this year and 6.5 percent next year, the World Bank said. It projected that the country's current account deficit will narrow to 3.5 percent of GDP this year from 4.9 percent in 2011.
"Developing countries need to evaluate their vulnerabilities and prepare for further shocks, while there is still time," Justin Yifu Lin, the World Bank's Chief Economist and Senior Vice President for Development Economics, said in a statement.
The Washington-based lender said developing countries have less fiscal and monetary space for remedial measures than they did in 2008-2009. As a result, their ability to respond may be constrained if international finance dries up and global conditions deteriorate sharply.
"While prospects in most low- and middle-income countries remain favorable, the ripple effects of the crisis in high-income countries are being felt worldwide," the bank said.
It has cut its global growth forecast for 2012 to 2.5 percent this year, down from an estimate of 3.6 percent in June.
After expanding by 9.7 percent in 2010, East Asia and Pacific region's GDP grew an estimated 8.2 percent in 2011, but growth is projected to ease to 7.8 percent for both 2012 and 2013, the World Bank said in the report.