The World Bank (WB
) has revised down its gross domestic product (GDP) growth forecast for Vietnam to 6.2% in 2016 from the previous 6.6% after a lower-than-expected growth rate of 5.46% in the first three months.
The revision is made due to slower private consumption and investment growth, the WB said in an economic update for the East Asia and Pacific region released on April 11.
Sandeep Mahajan, WB’s lead economist for Vietnam, explained that a decline in the country’s agricultural output, caused by drought in the Central Highlands and saline intrusion in the Mekong river delta, in the first three months of this year has resulted in the downgrade of the projection for Vietnam.
According to the General Statistics Office, Vietnam’s GDP expanded 5.46% year-on-year in Q1/2016, compared with a 6.12% expansion in the same period of 2015, due to a 1.23% decline of agricultural production.
Moreover, external demand for Vietnamese export has been weaker. The export growth has been significantly lower in Q1 in comparison with previous quarters while the foreign-invested sector, the main source of Vietnamese exports, has also seen a decline in export turnover, Mr. Mahajan added.
The economist noted that together with the Philippines, Vietnam has the strongest growth prospect among the large developing Southeast Asian countries.
The Asian Development Bank said last months that the bank had not assessed the impact of the drought and saline intrusion on Vietnam’s economy. However, its GDP growth would be threatened if the situation endures.
HSBC last week also cut its GDP growth forecast for Vietnam from 6.7% to 6.3% this year due to the lower-than-expected growth rate in Q1, caused by prolonged water shortages and saltwater intrusion.