Viet Nam's economy stabilized in 2012 as previous policy tightening suppressed inflation and bolstered external accounts. Subdued economic growth prompted an easing of monetary policy last year, but lending was constrained by problems in the banks. Growth in gross domestic product (GDP) is forecast to edge up this year and next, with inflation in the high single digits. Sustaining foreign direct investment inflows and maintaining competitiveness requires intensified efforts to reform banking, state-owned enterprises, and the business environment.
GDP growth ebbed to 5.0% in 2012, the slowest in 13 years, as fiscal and monetary tightening in 2011 continued to have an impact into last year. While the policies took a toll on growth, they achieved sharp reductions in inflation and a more stable exchange rate, and they contributed to a record current account surplus and to rebuilding foreign reserves.
All sectors - agriculture, industry, and services - recorded slower growth in 2012 than in 2011. Manufacturing decelerated to 4.5%, reflecting weak domestic demand, high inventories, and reduced bank lending. Construction grew by a modest 2.1% after contracting in 2011 when the government squeezed credit and cut public investment. Services expanded by 6.4% to make the biggest sector contribution to GDP growth last year. Tourism-related services benefited from 9.5% growth in visitor arrivals, though this was a slowdown from 2011. Agriculture grew by just 2.7%.
|Selected Economic Indicators (%) - Viet Nam||2013||2014|
Current account balance
(share of GDP)
Source: ADB estimates.
GDP growth is forecast at 5.2% in 2013, picking up to 5.6% in 2014 if progress is made in strengthening the banking sector and recovery in major industrial economies gathers momentum.
Source: ADB. 2013. Asian Development Outlook 2013. Manila.