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Viet Nam's Economy Continues on High Growth Path

MANILA, PHILIPPINES (9 April 2002) - Viet Nam's economic growth is expected to increase by 6.2 percent and 6.8 percent, respectively, in 2002 and 2003, compared to 5.8 percent in 2001, according to the Asian Development Outlook 2002 (ADO), released today by the Asian Development Bank.

The ADO, an annual publication that analyzes and forecasts economic trends, says that the economy will gain ground on several fronts in 2002. Acting as the prime movers, industry and construction together are projected to grow annually by about 10 percent. Consumer spending will expand by 4.5 percent, while the services sector will post a growth of 5-6 percent.

Construction will grow substantially due to ongoing infrastructure projects such as the Truong Son highway and urban development projects in major cities.

Viet Nam's trade outlook looks bright due to a bilateral agreement with the US and diversification toward manufactured exports. Exports are expected to jump to $16.7 billion in 2002 and to $18.7 billion in 2003, showing growth of 8.5 and 12 percent, respectively.

Recent trade liberalization and a rise in capital goods imports to implement approved foreign direct investment will result in import growth of 10 percent and 13 percent in 2002 and 2003, respectively.

The ADO notes that Viet Nam's growth of 5.8 percent was one of the highest rates of expansion in Asia last year. Fueled by a buoyant manufacturing and construction sector, the industrial sector grew by 9.7 percent in 2001.

Agriculture weakened last year, showing a moderate growth of 2.3 percent due to a fall in rice output and declining prices of agricultural goods.

In 2001, the services sector grew by 4.4 percent. Real estate services were the bellwether, strengthening by 8 percent due to a buoyant real estate market. The easing of procedures for issuing land-use certificates, the granting of permission to buy land to overseas Vietnamese, and the recognition of Viet Nam as one of the safer countries promoted land transactions. As a result, land prices in major urban areas such as Hanoi and Ho Chi Minh City increased by three or four times during the year.

Domestic demand was the main source of economic growth in 2001, led by strong expansion in investment stemming from low interest rates, the establishment of a large number of small and medium-sized enterprises, a rise in government capital spending and an increase in inflows of foreign investment.

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