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Vietnam Faces Risk of Prolonged Slow Growth: World Bank

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July 12 (Bloomberg) -- Vietnam’s GDP growth this year projected to reach 5.3%, compared with 5.2% in 2012, World Bank says in report released today in Hanoi. * Vietnam economic growth in 2014 seen at 5.4% * Vietnam 2013 inflation seen at 8.2%, 2014 inflation at 7.9% * Vietnam 2013 fiscal deficit seen at 4% of GDP, current- account surplus at 5.6% of GDP * Vietnam’s macroeconomic conditions are improving, report

says, citing moderate inflation, stable exchange rate,

increased reserves, reduced country risks * Vietnam decision to adjust exchange rate rather than

continue to defend currency was a “welcome move” * Foreign reserves have increased to 2.8 months of imports at

end of 1Q from 1.6 months in 2011 * Plan to delay requiring banks to use stricter standards for

bad debt gives banks room to “flexibly interpret the loan

classification system and to underreport NPLs” * Vietnam “government’s approach to restructuring its banking

sector is considerably different from what is generally

considered as good practice,” report says, citing lack of

systemic effort to audit key financial institutions,

decision not to use taxpayer money * While financial sector is fragile, risk of systemic crisis

has receded * Inflation has stabilized; price gain expectations have not,

with core inflation averaging about 10% and administrative

price hikes likely to continue in future * Progress in reforming state-owned enterprises largely

limited to preparation of regulations, many of which have

yet to be approved, and to development of restructuring

plans by SOEs

For Related News and Information: First Word scrolling panel: FIRST<GO> First Word newswire: NH BFW<GO>

To contact the reporter on this story: K. Oanh Ha in Hanoi at +84-4-3938-8940 or oha3@bloomberg.net

To contact the editor responsible for this story: K. Oanh Ha at +84-4-3938-8940 or oha3@bloomberg.net

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