WB forecasts Vietnam’s 2007-08 GDP growth to top region

Vietnam’s economy could expand by 8 percent in 2007 and 2008, the highest growth rate in the Southeast Asia, World Bank forecasts in a report released Thursday.

The World Bank’s East Asia and Pacific Updates report estimated the country’s GDP growth last year at 8.2 percent, which was supported by across-the-board strength in exports, consumption and investment.

The report noted that investment in Vietnam had been boosted by a surge in foreign direct investment before the economy’s accession to the World Trade Organization in January.

Vietnam’s WTO accession and a dramatic boom in the stock market were two events that dominated the economic landscape in the last six months, the report also noted.

Both of them “pose policy challenges for the government in the short- and medium-term, with the stock market already having attracted substantial short-term attention,” it adds.

According to the report, poverty reduction is occurring at rapid rates in Vietnam, where poverty at the $2 a day level is estimated to have fallen to around 36 percent in 2006, down from over 62 percent only five years ago.

Poverty rates in Vietnam are estimated to have now fallen below those in Indonesia and Philippines.

The WB attributed Vietnam’s “exceptional poverty reduction performance” to the contribution of rapid productivity gains in agriculture, diversification to new crops and non-agricultural activities, income gains from higher international prices for key exported crops, more resources for targeted poverty reduction programs and a more pro-poor focus in public investment and other fiscal expenditure programs.

Concerning other Southeast Asian economies, WB forecast the GDP growth in 2007 and 2008 of Thailand to be 4.3% and 4.5%; Malaysia, 5.6% and 5.8%; Indonesia, 6,3% and 6,5%; Philippine, 5,6% and 6,0%; and other smaller economies, on average 5.9% and 4.9%.

According to the report, a decade after the financial crisis that devastated East Asia in 1997-98, the region is far wealthier, has fewer poor people and a larger global role than ever before.

Led by continued strong growth in China, emerging East Asia now has an aggregate output of over $5 trillion, double the dollar value just before the crisis.

In per-capita terms real incomes are some 75 percent higher.

The poverty rate at the $2 a day level has fallen from 50 percent of the population to 29 percent today.

When Vietnam reaches middle income status (defined as annual per capita income of about $900), which could happen as soon as 2010, 9 out of 10 East Asians will live in a middle income economy.

World Bank, Thanh Nien News