The IMF said trade tensions and volatilityaffected Vietnam in 2018, but the economy had remained resilient, fueled bygrowth in middle class incomes and consumption, a strong harvest and surgingmanufacturing.
The strong economic momentum is expected tocontinue in 2019, aided by competitive labour costs and other strongfundamentals, including a diversified trade structure, and recently signed freetrade agreements which are spurring reforms, according to the IMF.
However, Vietnam’s gross domestic product (GDP)growth is expected to fall to 6.5 percent in 2019 due to weakening externalconditions, the IMF said.
The country’s inflation would increase from 3.5percent in 2018 to 3.6 percent and 3.8 percent in 2019 and 2020 respectively, itadded.
The IMF’s executive directors welcomed Vietnam’simprovements in tax policy and administration, including higher environmentaltaxes, the tightening of government guarantees and lower current spending,which helped cut public and publicly guaranteed debt.
They noted that the focus should be on thequality of adjustments to keep public debt on a declining path and create roomfor priority infrastructure and social spending, prepare for rapid prospectivepopulation aging, and deal with the effects of climate change anddigitalisation.
The directors also welcomed Vietnam’s monetaryand credit policies stance, especially declining credit growth which is helpingVietnam cement macroeconomic stability.
The IMF experts called on the Government to pushahead with reforms to reduce remaining barriers to investment, includingimproving access to land and credit, which would boost private investment andraise worker productivity and growth.