Vietnam expects annual economic growth of 6.3-6.5 percent this year, below target and slowing from last year’s 6.68 percent, as weakness in agriculture and exports dragged on one of Asia’s most resilient economies.
Adverse weather, including drought in the coffee belt and salination in the Mekong Delta, have put the brakes on Vietnam’s rapid growth, biting into its industrial and agricultural production, its exports and imports.
Vietnam’s exports should grow 6 to 7 percent this year, below the 10-percent target, while total loans as of now is seen growing 11.24 percent from the end of last year, Prime Minister Nguyen Xuan Phuc said on Thursday.
“Besides advantages, we faced many difficulties and challenges; global growth and trade were both lower than expected and prices of many basic goods and crude oil were low,” Phuc said in an address to the country’s national assembly.
Gross domestic product growth, however, is seen rebounding to 6.7 percent next year, Phuc said, while average inflation is expected to hit 4 percent and exports are seen growing 6-7 percent.
Weakness in mining and agriculture pressured Vietnam’s annual growth to 6.4 percent in the third quarter, the fastest quarterly pace this year but below the 6.87 percent in the same period last year. Inflation this year is seen at 4 percent, in line with the government target of keeping the consumer price index from rising above 5 percent, while foreign reserves hit a record $40 billion, Phuc said.
Lower GDP is expected to push Vietnam’s public debt ratio closer to a ceiling of 65 percent of GDP, he added, posing more challenges for Vietnam’s already tight state budget.
Vietnam’s economy expanded 6.68 percent in 2015, the fastest pace since 2007 and extending growth momentum that started in 2012.