Vietnam - ADB cuts Vietnam economic growth forecast to 5.8% in 2011 and 6.3% in 2012

In its Asia Economic Monitor Report released today, Asian Development Bank (ADB) cut its Vietnamese economic growth forecast to 5.8% in 2011 and 6.3% in 2012.

In a report released in September, ADB forecast that Vietnam’s economic growth would grow 6.5% in 2012.

Although Vietnam has maintained its tight monetary policy, taming the economic growth in 2011, its economic performance will be still robust in 2012.

According to ADB, Vietnam’s economy grew 5.4%, 5.7%, and 6.1% in the first three quarters, respectively, due to strong growth in industrial output and consumption.

Vietnam’s dong depreciated the most (against the US dollar), losing 7.2% given the large current account deficit and low foreign exchange reserves. Low levels of foreign reserves Vietnam, covering about a mere 2 months of imports, are a cause for concern.

Inflation in Vietnam remained high above the country’s target. As of October, inflation over the same period last year was 19.8%. Core inflation was still high due to precious metal price hikes.  By October, 2011, Vietnam’s core inflation reached 7.7% year-on-year.

Also, earlier, the World Bank (WB) forecast Vietnam’s economic growth to rise 6.1% and inflation at 10.5% in 2012.

VietBiz24

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