Vietnam fastest growing regional economy this year: World Bank

The World Bank expects Vietnam to be the fastest-expanding economy in Asean this year at 6.3%, a little lower than the country's 6.5% target.

The WB, in its latest Global Economic Prospects report released in Washington D.C. on Tuesday, forecast growth rates of 6.3%, 5.4%, and 5.2% this year for Vietnam, the Philippines, and Cambodia, respectively. They are the highest predictions for the region’s developing economies.

Compared with the bank’s previous report in June, the forecasts were down 0.2 percentage points for Vietnam and the Philippines, and 0.6 percentage points for Cambodia.

Among the 11 Southeast Asian economies, the WB classifies Singapore as the only advanced economy.

For the others, the bank expects slower growth of 4.8% and 4.0% this year for Indonesia and Malaysia, respectively, both down 0.5 percentage points from June; 3.8% for Laos (down 0.2 percentage points), 3.6% for Thailand (down 0.7 percentage points), and 3.0% for Myanmar (unchanged).

The bank warned that commodity and export-dependent economies like Vietnam, Cambodia, and Malaysia were “particularly vulnerable to slowing export demand, including from China.”

For the whole world, the multilateral institution cut its 2023 global GDP growth forecast to 1.7% from a projection of 3% in June, marking a sharp slowdown from the estimated 2.9% growth for 2022.

“Global growth has slowed to the extent that the global economy is perilously close to falling into recession - defined as a contraction in annual global per capita income - only three years after emerging from the pandemic-induced recession of 2020,” the bank stated in its Global Economic Prospects report.

The projected growth this year is the slowest outside the 2009 and 2020 recessions since 1993, it said.

The U.S., Europe, and China, the world’s three major engines of growth, are all undergoing a period of pronounced weakness, and the resulting spillovers are exacerbating other headwinds faced by emerging markets and developing economies, the bank added.

“Further negative shocks - such as higher inflation, even tighter policy, financial stress, deeper weakness in major economies, or rising geopolitical tensions - could push the global economy into recession.”

On January 6, Standard Chartered Bank put its Vietnam GDP growth prediction at 7.2% for 2023 and 6.7% for 2024. Standard Chartered's 2023 forecast is higher than those of HSBC and Singapore’s United Overseas Bank, which are 5.8% and 6.62%, respectively.