Business

The economic recovery in Vietnam in particular and in East Asia and the Pacific in general is robust, said the World Bank (WB) in its latest East Asia and Pacific Economic Update.

The WB Update was announced at a press briefing in Hanoi on October 19.

According to the Update, Vietnam’s economy has recovered strongly with a GDP growth of 5.3 per cent in 2009 and is on the way to the target of 6.5 per cent this year. The nation’s foreign investment rose from $6.9 billion in 2009 to $7.6 billion in 2010.

In addition, manufacturing companies’ relocation of plants in Southeast Asia is benefiting Vietnam as its workers’ salaries are low and its sea-bordered position is favourable for attracting investment capital.

The Update notes that output has recovered to above pre-crisis levels throughout developing East Asia, and is expanding at near pre-crisis rates in some countries. Real GDP growth is likely to rise to 8.9% in the region in 2010 (6.7% excluding China), up from 7.3% in 2009 and in line with the average growth rate during the 2000-2008 period. Private sector investment is once again driving growth, confidence is on the rise, and trade flows have returned to pre-crisis levels.

Yet, greater confidence in the region's growth prospects and concerns about tepid economic expansion in advanced economies is creating the need for policymakers to perform a delicate balancing act - in particular, around the return of large capital inflows and appreciating currencies.

'Should inflows remain strong, especially against a background of weak global growth, the authorities will be faced with the challenge of balancing the need for large capital inflows - especially foreign direct investment - with ensuring competitiveness, financial sector stability, and low inflation,' said Vikram Nehru, World Bank chief economist for the East Asia and Pacific region.

The East Asia and Pacific Update which is published twice yearly is the WB’s comprehensive review of the region’s economies.