Illustrative image (Photo: VNA)Hanoi (VNA) – TheVietnamese government’s commitment to broad-based economic reforms bodes wellfor the country’s longer term prospects and look to have it on the path toupper middle-income status, held KhoonGoh, head of Asia Research at Australia andNew Zealand Banking Group Limited (ANZ).
In an article on bluenotes.anz.com, Goh noted that Vietnam’s grossdomestic product growth in the first half of 2019 was solid, particularlyconsidering the downturn in global trade and the impact of African swine fever(ASF) on the agriculture sector.
Asa result, ANZ Research maintains its full-year 2019 GDP growth forecast forVietnam of 6.7 percent. Although this is lower than the 7.1 percent growth rateachieved in 2018, it reinforces Vietnam’s place as one of thefastest-growing economies in Asia, hestated.
As Vietnam continues toreap the benefits of past reforms and commit to further ongoing reforms, thecountry is on track to double its per capita gross national income from 2,400USD in 2018 to 4,800 USD by 2028, graduating to upper middle income status.
Heheld that there is a need for the country to manage the strong FDI inflows toensure adequate resource allocation while preventing overheating. Meanwhile, thegovernment’s shift towards a focus on attracting new-generation FDI isessential to ensure sustainable economic development, according to Goh.
Growthin Vietnam’s services sector has remained robust at 6.83 percent year on yearin the second quarter, as strong wage growth and growing urbanisation helpedboost wholesale and retail trade.
Expandingmanufacturing and external trade activity has also ensured strong growth forboth the transport and warehouse sectors, while the financial services sectorcontinues to benefit from growth in the overall economy, noted the expert.
Onearea that will require increasing policymaker attention is demographics.Although the working age population is still growing in absolute numbers, itpeaked in 2015 as a proportion of the total population.
Vietnamis aging, the number of people over the age of 60 will rise rapidly, resultingin the dependency ratio doubling within 20 years. This is one key reason whyANZ Research expects to see a slowing in Vietnam’s medium-term potential growthrate towards 6 per cent over the next decade.
Managingthis structural change requires timely measures in areas such as the retirementage and pension reforms.
Ifsuccessful, such reforms could be sufficient to move the country into theupper-middle income category, he concluded.-VNA
VNA
