Hanoi (VNA) - The World Bank on June 9 issued an update on Vietnam ’s recent economic developments, saying the country’s stabilisation package is showing signs of effect.
There are indications that this policy package is working, as the growth in non-food prices compared to the previous months, and the growth of monthly imports compared to the previous year, have started to decelerate, according to the report
The WB said the contraction of credit implemented as part of the economic solution package has had an impact on real estate prices, while prudential requirements for bank lending to securities companies and stock investors had cooled the market since summer 2007.
The stabilisation policies announced also included revising the GDP growth target downwards, from 8.5-9 percent to 7 percent, cutting government expenditure, stopping inefficient public investment projects and postponing new ones, as well as allowing greater flexibility of the exchange rate.
The report said Vietnam ’s outlook is less favourable than it was a year ago, however, its economic fundamentals remain strong and the GDP growth be more resilient than the official target suggests.
The report pointed out the first quarter growth rates of agro-forestry-fishery of 2.9 percent, industrial production of 9 percent, construction of 3.3 percent and four-month export growth of 27.6 percent as proof of the country’s encouraging economic development.
However, the WB emphasised the need to implement other components of the package saying the government only relied on monetary tightness and that fiscal adjustment is needed to avoid putting all the burden of stabilisation on interest rates.
Ensuring the stability of the financial sector and maintaining depositors’ confidence in the banking system is another urgent measure for Vietnam , the WB said.