Vietnam’s gross domestic product (GDP) is foreseen to reach $154.6 billion (average personal capital income of $1,705.8) or an increase of 5.5% in 2013, the Ernst & Young said in its latest report on 25 world’s fastest-growing markets.
The Southeast Asian country will run 7.8% inflation and 3.4% State budget deficit this year, the report said.
According to Ernst & Young, Vietnam””s cooled inflation in 2012 had helping to reduce interest rates andpush the household spending. However, the country’s GDP slowed down to 5.03% in 2012 from 6% in 2011 due to dismal export markets, limited industrial investments and bad debt problem that curbed credit growth.
Vietnamese Government’s pursuit of 7.5% GDP growth in the medium-term becomes more difficult dueto bank restructuring, Ernst & Young said, adding that although the bank system’s restructuring willcontribute to strengthening the banking system in the long term but it will limit credit growth in the near time.
Vietnam may reach nearly 7% GDP growth in 2014 together with recovery of the export market if banks are stable and draft on changes in FDI policies will be issued. Import substitution strategy can not solve the trade deficit despite purchasing power has significantly increased due to lower inflation. Besides, the fierce competition from countries having low production costs is also considered as a risk that will reduce the country’s growth.
The 25 world’s fastest-growing markets will have the average increase of 5.4% in 2013 and 6.4% in 2014 from 4.6% in 2012. The European Union economy is expected to fall 0.3% this year, the report mentioned.
