Vietnamese economy forecast to grow by 6.5 percent in 2017: ADB

The Vietnamese economy is forecast to grow by 6.5 percent in 2017 and 6.7 percent in 2018, said the Asian Development Bank (ADB) on Monday.

The forecast was made in the ADB Outlook (ADO) 2017 report.

In late 2016, the Vietnamese government targeted that the country's economic growth will hit 6.7 percent in 2017.

Also, the bank predicted that Vietnam's consumer price index will increase by 5 percent in 2017 and 5 percent in 2018.

The report said that continued record levels of foreign direct investment will boost domestic manufacturing and help lift Vietnam's export earnings even though global and regional trade flows will remain depressed.

Vietnam's rapidly expanding middle-class, which is expected to double in size by 2030 to 33 million, will also help to push up consumer spending and boost retail activity.

Meanwhile, agricultural output is expected to pick up modestly in 2017 given the outlook for higher global food prices and a return to more normal weather.

"In recent years, in the face of growing international competition and low domestic labor productivity, Vietnamese agriculture's growth has slowed to an average of just 2 percent per annum since 2011," said Eric Sidgwick, ADB country director for Vietnam.

Since agricultural output per worker in Vietnam is one-third of Indonesia's and less than half of Thailand's and the Philippines', the report emphasized that boosting growth in the agriculture sector will be vital for Vietnam to achieve its aspirations of becoming an upper-middle income country.

In order to do so, a number of major policy challenges will need to be addressed, including introducing greater competition into agricultural supply-chains and post-harvest processing, developing rural infrastructure to support higher-value adding cash crops, adopting more sustainable natural resource management practices, and better integrating climate change considerations into policy-making processes, said ADB. Enditem