The Vietnamese economy is set to record weaker growth this year and the next, intensifying the demand for further loosening of monetary and fiscal policies, a report from the World Bank said Friday.
The report said that the economy is facing may downside risks, including that of stoking inflationary pressures and reversing the recent gains in macroeconomics stability. Also, delayed implementation of structural reforms could undermine investors' confidence and worsen growth prospects further.
The World Bank forecasts that the Vietnamese economy would grow at a moderate rate of around 5.3 percent this year and 5.4 percent in 2014. At the same time, inflation is seen rising to 8.2 percent at the end of the year.
The report further noted that the country's financial sector remains fragile, though the central bank's efforts to restore macroeconomic stability and tighten the credit policy have prevented the vulnerabilities from growing bigger.
Also, the measures adopted by the government to restructure the country's banking sector is not in accordance with standard norms, it said.
The Bank, however, observed that Vietnam's macroeconomic conditions are relatively stable, with inflation moderating and the exchange rate stabilizing. The country's exports recorded strong growth in the first half of the year helped by robust foreign investment.
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