Vietnam’s economy is expected to grow at a moderate rate of around 5.3percent this year and 5.4 percent in 2014, according to a reportreleased by the World Bank (WB) in Vietnam on July 12.

The report forecasts that inflation will increase to about 8.2 percent by the end of the year.

In the report, WB experts said that Vietnam’s macroeconomicconditions continue to improve as its economy enters the third year ofrelative stability.

Inflation was 6.7 percentin June 2013. Central Bank reserves have more than doubled in the pasttwo years. Meanwhile, Vietnam’s credit default swap was about 250 basicpoints in June 2013 compared to about 350 one year ago.

According to the report, in the first half of 2013, the country’stotal export value saw a year-on-year increase of 16 percent. Theforeign-invested sector accounts for 66 percent of total exports, up 25percent from the first six months of last year.

In the same period, exports of mobile phones and spare parts became thecountry’s largest export item with a total value of 9.9 billion USD,surpassing traditional exports like crude oil, garments and footwear.

The report also cites the results of the ASEANBusiness Outlook Survey by the Singapore Business Federation and theAmerican Chamber of Commerce (Amcham). It says that Vietnam remains themost popular location for expansion within the ASEAN region.

However, the report also points out challenges Vietnam’smacro-economy has been facing, including slow structural reform, whichit says, can reduce investors’ trust and badly affect the country’sgrowth prospects.

Restoration of macroeconomicstability and the tight credit policy of the State Bank of Vietnam haveprevented the vulnerabilities from growing bigger, the report says.

According to the report, the establishment of the Vietnam AssetManagement Company has been the most visible step taken by theGovernment to deal with bad debts.-VNA