WB hails Vietnam’s economic prospect
Viet Nam and the Philippines are among the countries with the strongest growth prospects, according to the World Bank Global Economic Outlook 2016.
The Philippines’ growth is projected to firm to 6.4% in 2016 and 6.2% between 2017 and 2018. Meanwhile, Viet Nam’s growth is expected to expand at an average of 6.3% in 2016-2018.
This is encouraging news against the backdrop that the global economic environment is expected to remain challenging. Although there signs of a modest pickup in growth, global trade and commodity prices remain weak.
In East Asia and Pacific (EAP), growth is estimated to slow to 6.4% in 2015 and decelerate to 6.3% on average in 2016-2018, reflecting the slowdown in China and a sluggish recovery in the rest of the region.
Growth is expected to rise modestly in Indonesia and Malaysia in 2016-2018, and reforms are implemented to spur investment growth in Indonesia.
Among the large developing ASEAN economies, growth in Viet Nam and the Philippines will benefit from rising household incomes caused by low commodity prices, a diversified and competitive export base (Viet Nam), and investment driven by robust FDI flows.
The weak growth in commodity-exporting economies (Indonesia and Malaysia) was expected while Viet Nam surprised with a stronger-than-expected performance.
EAP is characterized by large FDI inflows and outflows. Developing EAP accounts for more than half of all FDI inflows to developing regions. FDI has typically gone into a wide variety of sectors, including manufacturing (Cambodia, Indonesia and Viet Nam).
In terms of remitance, emerging markets are now among the largest source and destination countries for remittances, accounting for 40% of the global remittance in- and outflows. Five emerging market and frontier market source countries (Kuwait, Qatar, Russia, and United Arab Emirates) account for 20% of global remitance outflows.
Emerging market and frontier market recipient countries such as Egypt, India, Nigeria, the Philippines, Pakistan, and Viet Nam account for 28% of global remittance receipts.
Regarding the Trans-Pacific Partnership, the agreement could provide a new impetus to trade, and lift activity, by helping to reduce tariffs and other trade barriers. By 2030, the TPP could lift member country GDP by an average of 1.1%, with much larger benefits in countries like Viet Nam and Malaysia.
Viet Nam and Malaysia would be among TPP member countries benefiting most. The largest gains in GDP are expected for Viet Nam and Malaysia (10% and 8%, respectively). Both countries would benefit from lower tariffs.
Low- and middle-income economies often have comparative advantage in labor-and natural-resource intensive industries. By cutting tariffs for labor-intensive garments, the TPP thus benefits countries like Viet Nam.