Economists have forecast that the Vietnamese economy could grow by 6.86 percent this year, higher than the 6.6 – 6.8 percent set by the National Assembly.

They made the prediction during a symposium held by the National Centre for Socio-Economic Information and Forecast (NCIF) in Hanoi on July 11 discussing 2019 mid-term economic report.

Speaking at the event, NCIF Director Tran Thi Hong Minh said the growth of agro-forestry-fishery sector could reach 3.02 percent, agriculture and construction 8.61 percent, and services 6.84 percent. Inflation would be about 3.13 percent, well below the targeted 4 percent.

The economy expanded by an estimated 6.76 percent in the first half, lower than the 7.08 percent growth recorded during the same period last year.

NCIF Deputy Director Dang Duc Anh said while macro-economy was stable in the past six months, but various challenges arose during January – June, including unfavourable weather conditions, the African swine fever and slow disbursement of public investment capital.

Export growth also slowed down due to adverse impacts of the world economy.

A bright point was the increasing inflow of investment capital from China which soared to over 2.2 billion USD while foreign investment via mergers and acquisitions nearly doubled year-on-year.

In order to achieve economic growth target, Anh suggested continuing to pursue a cautious monetary policy to keep foreign exchange rate and interest rates stable, gear credit towards manufacturing and trade while stepping up the disbursement of foreign and private investment capital.

He called on the government to intensify the fight against trade frauds, improve workforce quality via connecting with firms to offer vocational training, and promote start-ups.

Vietnam’s growth momentum moderated since the beginning of the year, but outlook remains positive, according to Taking Stock, the World Bank (WB)’s bi-annual economic report on Vietnam.

During the reported period, the service sector performed robustly – signaling sustained buoyancy in domestic demand and especially private consumption.

The public debt-to-GDP ratio declined from a peak of 63.7 percent in 2016 to an estimated 58.4 in 2018.

Recent slower growth reflected the repercussions of unfavorable external factors on key economic sectors.

The outbreak of African swine fever and a decline in international prices dampened agricultural outputs while weaker external demand moderated growth of the export-oriented manufacturing sector.

Despite these signs of a cyclical moderation in growth, Vietnam’s outlook remains positive, the report says.

Real GDP growth for the whole year of 2019 is forecast to decelerate to 6.6 percent, driven by a weaker external demand and continued tightening of credit and fiscal policies. Inflation indexes are meant to be kept below the official inflation target of 4 percent.

Ousmane Dione, the World Bank Country Director for Vietnam, said risks have continued to intensify, reflecting heightened global uncertainty amid re-escalation of trade tensions and rising financial volatility.

Those external risks are compounded by domestic vulnerabilities, including potential slippages in fiscal consolidation, Stated-owned enterprises and banking sector reforms could undermine investor sentiment and growth prospects.

“Vietnam needs to prepare to adjust macroeconomic policies in case some of these risks materialise and lead to a deeper than expected downturn,” said Ousmane Dione.

He said Vietnam will also continue to push for deeper structural reforms, enhance export competitiveness and further deepen trade integration through bilateral and regional agreements.

According to the report, the tourism industry contributed 8 percent of GDP in 2017. It surmises that the sector’s rapid expansion has brought it to a tipping point in its development, where continued growth, if not well managed, could have adverse economic, environmental, and social impacts.

The report suggests certain measures to ensure the long-term sustainability of the sector.

Key priorities include enhancing coordination of destination planning and product development, diversifying tourism products and visitor source markets, developing tourism workforce skills, strengthening local tourism value chain linkages, improving visitor flow management, boosting destination infrastructure capacity and quality, and protecting environmental and cultural assets