Vietnam’s gross domestic product (GDP) has picked up 5.4 percent in 2014, said World Bank (WB) in its East Asia Economic Update launched on October 6
The country’s economy expands at a much lower than the target of 5.8 percent set by the Government. According to Sandeep Mahajan, WB lead economist for Vietnam, the number will be raised if the Southeast Asian country’s economy can be improved in last three months of the year.
According to WB’s report, Vietnam’s economy posted a relatively macro-economic stability and maintained export and balance of payment.
WB experts also pointed out a paradox in the country’s economy that while foreign direct investment (FDI) sector is stable and a factor to push up the nation’s economy growth, a slowdown in domestic demand restrains the development.
Retail markets showed that purchasing power decreased by 5.7 percent in six months due to a decline in consumers’ confidence.
The ratio of private investments were only 10.7 percent of GDP in the first quarter of the year, lower than 13.9 percent in the same period in 2010. In addition, more and more local privately-invested enterprises shut down or stopped operations.
In first seven months of the year, around 37,600 local enterprises have gone out of businesses, an increase of 10 percent compared to same period last year.
Accordingly, FDI sector continues pushing up the country’s economy. In fact, FDI sector contributed 20 percent of the nation’s GDP, 25 percent of investment and offered millions of jobs for local laborers.
WB experts advised that Vietnam’s government should focus more on re-structuring state-owned enterprises and banks.
