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Tag: World Bank

  • Bangladesh Plans Rail Shift to Cut Export Logistics Costs

    Bangladesh Plans Rail Shift to Cut Export Logistics Costs

    Bangladesh Railway plans to overhaul its freight operations to lift rail cargo market share from barely 3 per cent to 20 per cent, targeting direct track connections into industrial supply chains.

    The shift aims to reroute bulk consumer freight and apparel exports away from congested national highways into dedicated rail corridors linking Chattogram Port with Dhaka manufacturing hubs.

    Under the Logistics Policy 2025, transport planners want rail to carry a fifth of all commercial freight across the country. To map that buildout, state operators launched the Tk 930 million Green Railway Transport Project Preparation Facility Project, backed by World Bank financing. The study evaluates track lines running from Faujdarhat to the Chattogram Goods Port Yard, alongside future connections into the planned Bay Terminal and the Mirsharai Economic Zone.

    Overhauling Chattogram Port Rail Access

    Chattogram Port handles roughly 90 per cent of Bangladesh’s international merchandise trade, yet rail links across its terminal footprint remain uneven. Older installations including the General Cargo Berth and Chittagong Container Terminal have direct tracks, while newer sites like the Patenga Container Terminal and New Mooring Container Terminal lack equivalent integration.

    That disconnect leaves cargo trains idling while diesel trucks haul containerised freight across jammed access roads. Track gauge fragmentation complicates the network further. Large segments of the eastern railway run on narrow metre-gauge tracks, requiring costly transshipment before rolling stock can connect with broad-gauge lines servicing northern and western trade lanes.

    The feasibility project assesses the rolling stock and yard hardware required to eliminate those delays. Planners are auditing requirements for dedicated freight locomotives, container wagons, shunting yards and loading tracks, alongside modernised maintenance depots in Chattogram.

    Building Inland Terminals Near Dhaka

    Upstream logistics hinges on getting containers quickly into garment manufacturing belts around the capital. The proposed Dhirasram Inland Container Depot in Gazipur serves as the primary inland node designed to clear maritime boxes away from maritime quays.

    Shippers running supply chains between Dhaka and coastal docks currently face unpredictable transit schedules. Road transport delivers flexibility on local spurs, but highway bottlenecks add substantial inventory holding costs for consumer brands, textile mills and bulk distributors. Shifting cargo to scheduled freight trains cuts fuel burn while lowering per-ton haulage expenses on longer runs.

    Railway freight targets extend beyond export apparel boxes. State authorities want long-term freight agreements covering petroleum products, fertiliser, grain imports and construction materials, securing reliable baseline volume through predictable tariff contracts.

    Logistics Realities for Regional Shippers

    For factory operators, retail importers and cargo forwarders, rail is viable only if end-to-end transit times beat road haulage. Shifting cargo off roads requires modern handling machinery, quick digital customs clearance and dependable departure times at inland dry ports.

    Commercial transport planners argue that engineering projects must incorporate freight forwarders and port operators before track laying begins. Without matching first-mile handling and competitive terminal fees, inland container depots risk operating below capacity while trucks continue to command container flows.

    Regional trade corridors present additional operational capacity. Bangladesh Railway forms part of the Trans-Asian Railway framework, offering rail freight routes into India, Nepal and Bhutan. Unlocking those border routes requires harmonised customs systems and unified track standards to eliminate cross-border shunting delays.

    Technical evaluations for the World Bank funded port link project are expected to complete their studies by the end of 2027.

  • Asia to Drive 59% of Global Growth as World Economy Slows to 2.6%

    Asia to Drive 59% of Global Growth as World Economy Slows to 2.6%

    Asia will generate 59 percent of global economic expansion in 2026 as worldwide growth slows to 2.6 percent, down from 2.9 percent last year.

    Higher energy prices linked to conflict in the Middle East continue to drag on performance, the United Nations Conference on Trade and Development said in its latest trade and development report. Total trade in goods and services will rise 4 percent in constant prices, lifted primarily by elevated fuel costs after global merchandise and services turnover reached a record $35 trillion in 2025.

    India and Southeast Asia Lead Regional Output

    India will lead major economies with projected growth of 7.3 percent in 2026. Indonesia follows at 5.2 percent, while China is forecast to expand by 4.5 percent. These three markets form the core of regional momentum as Western demand softens and energy bills rise.

    Regional trade networks have adjusted to sharp declines in direct transpacific shipments. Bilateral trade between China and the United States has dropped by more than 20 percent since 2024. Producers in East Asia have absorbed the shift, increasing cross-border volumes with both mainland China and North American buyers to keep consumer goods moving.

    Export Controls and Supply Chain Friction

    Policy barriers have tightened across strategic manufacturing sectors, altering the economics for component suppliers and consumer device assemblers. Trade officials pointed to rising regulatory hurdles that limit cross-border investment and factory expansion.

    Export controls, investment screening and supply-chain conditions make strategic sectors harder for new entrants to access

    Semiconductors and artificial intelligence hardware represent the largest single driver of merchandise trade across East Asian freight hubs. Yet UNCTAD warned that elevated trade in hardware components does not translate automatically into wider economic gains across emerging markets. Financial stability risks have also widened because equity markets and capital spending remain concentrated in a small group of dominant technology companies.

    Shifting Margins for Brands and Retailers

    For consumer brands and logistics operators across Asia, the data confirms a two-speed operating environment. Strong domestic wage gains and consumer spending in South and Southeast Asia balance out sluggish revenue growth in export-dependent Western markets. Retailers expanding across India and Indonesia benefit from firm local demand, while export manufacturers face higher ocean shipping fuel surcharges.

    Supply chain rerouting adds capital expense for regional distributors. Moving intermediary goods through third-party Asian hubs avoids direct tariffs but increases handling costs, inventory holding requirements, and port turnaround times. Retailers importing finished goods must price in these structural transport costs rather than treating higher shipping bills as temporary spikes.

    Differing Multilateral Forecasts for 2026

    Multilateral institutions hold diverging views on how severe the current deceleration will be. The World Bank lowered its 2026 global growth baseline to 2.5 percent in June, citing Middle East conflict risks, and estimated that an escalating crisis could cut worldwide output growth to 1.3 percent in a worst-case scenario.

    The International Monetary Fund maintains a higher forecast of 3 percent. However, the fund identified trade fragmentation, energy price spikes from the war involving Iran, and potential equity market corrections in the artificial intelligence sector as immediate threats to that baseline.

    Trade ministers and central banks across the region now track fourth-quarter energy import bills and bilateral tariff updates ahead of the next IMF and World Bank global economic outlook revisions scheduled for early 2027.

  • Vietnamese Banks Plan Nearly $7 Billion in Share Sales

    Vietnamese Banks Plan Nearly $7 Billion in Share Sales

    Vietnamese banks are planning nearly US$7 billion in share sales as the country’s fast-growing economy fuels demand for capital in October 2026.

    The planned offerings open a window for foreign investors to expand in the financial sector after Vietnam reported economic growth of nearly 10 per cent in the last quarter.

    Access to the industry remains tightly controlled by state regulations, which cap cumulative foreign ownership in domestic lenders at 30 per cent and limit individual offshore stakes to 20 per cent.

    Foreign Ownership Limits Face Fresh Scrutiny

    The capital drive arrives as international asset managers reassess their allocations to Southeast Asian financial assets. FTSE Russell reclassified Vietnam as a secondary emerging market, a technical transition estimated to channel between $3 billion and $5 billion in portfolio inflows into local equities. For global funds, commercial banking counters offer the most liquid gateway to consumer spending, industrial real estate financing and retail supply chains.

    Foreign investors still face operational friction despite high domestic credit demand. Offshore funds often pay steep over-the-counter premiums to acquire shares from existing foreign holders when a lender hits its 30 per cent ceiling. Easing or selectively lifting these limits gives local banks direct access to long-term institutional capital, but state authorities remain cautious about ceding governance control in core financial intermediaries.

    Reforms Target Capital Market Modernization

    Hanoi has accelerated regulatory overhauls to modernize its broader corporate landscape. The government enacted more than 86 laws and 300 decrees since 2025, overhauling customs, commercial tax codes, digital banking operations and judiciary procedures under an economic program led by General Secretary To Lam. The administrative updates aim to transition the economy away from basic low-cost manufacturing toward higher-value tech assembly, modern logistics and formal retail distribution networks.

    These policy shifts follow long-term structural changes that elevated Vietnam to upper middle-income status in July 2026, according to World Bank classifications. National gross domestic product per capita passed $5,000 in 2025, up from under $700 when initial market-oriented Doi Moi reforms began in 1986. Annual economic expansion averaged more than 7 per cent following pandemic reopenings in 2022, reaching 8 per cent in 2025 on high export volumes and resilient domestic retail trade.

    Credit Growth Targets and Trade Pressures

    Maintaining high balance-sheet expansion carries operational risks for commercial lenders. Vietnam runs an export-heavy trading model where total trade turnover equals roughly 170 per cent of gross domestic product, leaving corporate borrowers exposed to overseas tariff shocks, geopolitical shipping disruptions and currency volatility. The World Bank projects national economic growth of 6.8 per cent for 2026 before accelerating to 7.1 per cent in 2027, citing corporate debt use and foreign-exchange pressures as key vulnerabilities.

    Bank executives now look to upcoming legislative sessions where lawmakers will review potential adjustments to foreign investment limits across strategic commercial sectors. Lenders must balance their new equity issues against state economic targets that aim for average annual GDP growth of at least 10 per cent through 2030.

  • Myanmar Property Prices Quadruple Since 2021 Coup as Capital Flees Inflation

    Myanmar Property Prices Quadruple Since 2021 Coup as Capital Flees Inflation

    Residential property prices in Myanmar have quadrupled since the military took power in 2021, World Bank estimates show. Housing has become a primary refuge against severe currency depreciation.

    Inflation and volatility in assets such as gold drove buyers to funnel capital directly into physical real estate across commercial hubs like Yangon.

    Authorities have introduced administrative measures to cool the market and restrict speculative deals. Domestic savers face dwindling options as the kyat slides, turning property into the default tool for capital preservation.

    Capital Shifts Away From Gold and Cash

    Local investors previously rotated savings into foreign currency and precious metals. Now, they concentrate funds in residential land and housing developments. Shifting trade rules made physical gold volatile, sending buyers toward assets that resist sudden shocks.

    Yangon absorbed the bulk of this domestic capital flight. Deals remain concentrated in residential subdivisions and standalone plots with secure title deeds, keeping cash out of depreciating bank accounts.

    “But we have found that property is less vulnerable to price swings in Myanmar. So we just stay in real estate now.”

    Implications for Commercial Landlords and Developers

    This residential boom masks distortions across commercial real estate. Retailers, store operators, and commercial tenants face steep rent hikes pegged to land values, even as consumer purchasing power falls.

    Developers with completed residential units find steady cash buyers. Commercial landlords, meanwhile, struggle to maintain occupancy. High material import costs and regulatory barriers restrict new supply, channeling incoming capital into existing stock.

    Inflation Hedges Across Emerging Asia

    Using property as an inflation shield mirrors patterns seen in other distressed frontier markets across Asia. When stability weakens and exchange rates fall, investors routinely pull capital from financial instruments and shift it to fixed assets.

    Concentrating domestic savings in Yangon property elevates long-term risk. Owners hold illiquid assets that depend on local capital recycling, leaving them exposed if regulatory curbs tighten or secondary-market sales stall.

    Roots of the Fourfold Surge

    The price rally began after February 2021, when the military seized control and foreign exchange limits multiplied. Over the next three years, curbs on currency trades, bank withdrawals, and gold trading steadily narrowed options for private wealth holders.

    With alternative investment channels restricted by authorities, residential property emerged as the least regulated option for large-scale wealth storage.

    Enforcement and Transaction Rules to Watch

    Market watchers are tracking the enforcement of recent property transaction curbs introduced by Yangon municipal and fiscal authorities. Upcoming directives on deed registrations, wealth declarations, and transfer taxes will determine whether domestic capital stays locked in real estate or seeks fresh outlets.

  • Indonesia Middle Class Shrinks to 7.1 Percent as Graduate Joblessness Rises

    Indonesia Middle Class Shrinks to 7.1 Percent as Graduate Joblessness Rises

    Indonesia’s pool of middle-class earners shrank to 7.1 percent of the workforce last year, down from 14.5 percent in 2018, as hiring across major corporate sectors stalled.

    The contraction leaves approximately one million university graduates without employment as commercial enterprises halt capital expenditure and delay operational expansion in Jakarta and regional hubs.

    Corporate Expansion Freezes

    Companies across key commercial sectors have postponed new investments, responding directly to elevated regulatory uncertainty. The freeze has hit white-collar hiring tracks that previously absorbed waves of university leavers entering the formal economy.

    High-skill employment opportunities have contracted sharply across metropolitan centers. Even experienced media and tech staff face extended redundancy periods following broadcast and enterprise budget cuts.

    Middle-Class Purchasing Power Drops

    For consumer brands and retailers, the collapse in middle-class workforce participation reshapes demand across discretionary categories. When salaried positions vanish, household spending pivots immediately toward basic necessities and value formats.

    Operators in apparel, electronics, and specialty food and beverage face thinner margins as middle-income traffic recedes. The risk sits squarely with mid-tier retail chains that expanded footprints on assumptions of steady purchasing power growth.

    Labor Realities Pressure Targets

    Official economic growth ambitions confront deteriorating employment fundamentals across Java and outer provinces. Public job fairs in Jakarta continue to draw thousands of applicants competing for a shrinking roster of entry-level openings.

    The earlier economic trajectory that lifted millions into formal salaried roles during the mid-2010s has reversed. Rising living costs and corporate headcount rationalization now drive skilled workers toward the informal economy or overseas labor markets.

    Regulatory Revisions to Watch

    Enterprise operators are tracking upcoming government policy adjustments on investment rules and labor compliance schedules. Market recovery hinges on whether policy clarity can unlock stalled private sector capital before the next annual graduation cycle adds hundreds of thousands more job seekers to the registry.

  • World Bank Urges Thailand to Lift 12% AI Adoption Rate for 2037 Goal

    World Bank Urges Thailand to Lift 12% AI Adoption Rate for 2037 Goal

    Thailand must lift its corporate artificial intelligence adoption beyond the current 12 per cent rate to hit high-income status by 2037, according to the World Bank.

    Only about one in eight Thai businesses currently deploys AI tools, despite recent data centre investments and an established electronics manufacturing base. Speaking at the Bangkok Business Summit, World Bank vice-president for East Asia and Pacific Carlos Felipe Jaramillo warned that commercial adoption remains too concentrated among large corporations in the capital.

    Closing the SME technology gap

    Small, medium and micro-enterprises outside Bangkok account for the bulk of employment but lag in digital capabilities. The multilateral lender presented its “Building Thailand’s Future Today” report at the summit, hosted by the Joint Standing Committee on Commerce, Industry and Banking, setting out reforms for enterprise competitiveness.

    Thailand spends roughly 1 per cent of gross domestic product on research and development. Across the East Asia-Pacific region, that average sits at 2.5 per cent. World Bank senior economist Katherine Stapleton said closing that divide requires redirecting state R&D incentives toward smaller firms rather than limiting innovation programmes to top-tier conglomerates.

    RetailNews Asia notes that enterprise technology providers across Southeast Asia face a similar bottleneck: high digital consumer penetration alongside sluggish software uptake inside merchant supply chains. While Bangkok ranks among the region’s most connected consumer markets, commercial software integration across provincial retail and logistics networks remains sparse.

    Raising growth targets

    Meeting the government’s 2037 high-income target will require annual real GDP growth to jump to 5.4 per cent per person. Thai economic expansion has averaged 2.2 per cent per person since the pandemic.

    Exports generate roughly 70 per cent of Thailand’s gross domestic product, yet foreign direct investment continues to generate weak spillover gains for local suppliers. The World Bank argues that upgrading domestic software capabilities and fostering regional commercial hubs will determine whether the economy escapes middle-income stagnation.

    The Joint Standing Committee and state planning agencies are now reviewing corporate tax breaks and startup development programmes ahead of the next fiscal policy cycle.

  • Pakistan Plans Uniform Gas Tariff to End Cross Subsidies

    Pakistan Plans Uniform Gas Tariff to End Cross Subsidies

    Pakistan is replacing its tiered gas pricing system with a single uniform tariff across all consumer categories. Petroleum Minister Ali Pervaiz Malik outlined the plan to utility executives in Islamabad.

    The Oil and Gas Regulatory Authority sets the benchmark prescribed price near Rs1,700 per million British thermal units. Even so, end-users currently pay anywhere between Rs500 and Rs4,300 per mmBtu depending on consumption brackets.

    Aligning Rates with IMF Targets

    International lenders and domestic regulators have pressed Islamabad to dismantle cross-subsidies and recover actual distribution costs. Under the new model, vulnerable households will receive targeted welfare payouts instead of discounted bills. Businesses and heavy users will pay a standardized rate.

    Malik directed state-run distributor Sui Southern Gas Company to redesign its operational model around the single-rate baseline. The utility cut unaccounted-for gas losses by roughly 57 per cent in volumetric terms over the past year. Islamabad also held headline tariffs flat, trimming roughly Rs55 billion from the sector’s circular debt balance.

    Reforming Industrial Utility Models

    For commercial operators and factories across Pakistan, ending tiered subsidies removes pricing distortions that pushed manufacturers toward alternative fuels. The shift mirrors utility overhauls in Bangladesh and India. Both nations curtailed industrial discounts to secure multilateral loan tranches and stabilize sovereign balances.

    Technical advisers from the World Bank are helping Islamabad prepare the broader restructuring plan. The cabinet must review the pricing mechanism next, clearing the regulatory authority to calculate baseline consumer rates for the upcoming fiscal cycle.

  • World Bank Projects 5.8% GDP Growth for Vietnam by 2025

    World Bank Projects 5.8% GDP Growth for Vietnam by 2025

    Vietnam’s Economic Landscape: Navigating Global Trade Shifts and Strengthening Growth Prospects

    As a trade-dependent economy, Vietnam is significantly influenced by evolving global trade policies. Currently, the U.S. is Vietnam’s largest export market, constituting 30% of its total exports, while China accounts for 38% of its imports. However, uncertainties in the global landscape may pose challenges to consumer confidence and spending, as highlighted by the World Bank (WB).

    Trade Policy Uncertainty and Consumer Confidence

    The World Bank reported that the ongoing shifts in global trade could adversely impact Vietnam’s exports and overall economic growth. Given the country’s high exposure to the international market, any unexpected changes in trade policy could diminish demand, slowing private investments and foreign direct investment (FDI).

    Despite these challenges, consumer spending has not kept pace with GDP growth in recent years. The financial sector shows signs of heightened vulnerability, with the average loan-loss coverage ratio among 26 banks dropping to 83% from 150% in 2022. Although the government has room to bolster demand through fiscal measures, effective execution may be hindered by ongoing issues with public investment disbursement.

    Poverty Trends: A Mixed Bag of Progress

    On a more positive note, Vietnam’s poverty rate is experiencing a decline. The proportion of the population living on less than $3.65 per day is projected to fall from 3.8% in 2024 to 3.6% this year. Nonetheless, sluggish growth in the agriculture sector suggests that the poorest segments may see limited gains.

    Call for Strategic Policy Measures

    Experts advocate for focused policy measures that prioritize public investment, mitigate financial sector risks, and implement structural reforms. While monetary policy interventions are restricted, fiscal strategies can still drive growth, especially through investments aimed at addressing critical infrastructure gaps. Recent reforms, including updates to the Law on Credit Institutions, lay the groundwork for enhancing financial sector stability and resilience.

    Future Growth Outlook: Optimism Amidst Challenges

    Accelerating structural reforms is essential for improving regulatory environments in vital sectors like information technology, electricity, and transportation. Such initiatives will not only green the economy but also build human capital and enhance the business climate, ultimately sustaining long-term economic growth.

    The World Bank forecasts a positive medium-term growth outlook for Vietnam, projecting GDP growth to rebound to 6.1% in 2026 and climb to 6.4% in 2027. To unlock this potential, Vietnam must navigate a more stable international economic landscape while reinforcing domestic reforms aimed at boosting productivity, investing in human capital, and advancing environmental sustainability.

    In conclusion, as Vietnam looks ahead, the interplay of global economic conditions and domestic reform efforts will be critical in shaping the retail sector and consumer experiences in the coming years. The path forward is ripe with opportunities for brand expansion and adaptation to emerging consumer trends.

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  • World Bank lowers Vietnam growth forecast to 5.3 pct

    World Bank lowers Vietnam growth forecast to 5.3 pct

    The World Bank has cut its growth forecast for Vietnam this year to 5.3 percent, due to surging Covid-19 infection in Q1 and economic slowdown in its major export markets.

    This has been the second time the bank lowers its 2022 projection for the country. Last October it had expected a growth rate of 6.5 percent, lowered to 5.5 percent in January.

    Vietnam’s GDP is expected to grow by 5.3 percent this year and stabilize at around 6.5 percent in a scenario with eased mobility restrictions domestically and internationally, it added to a report released Tuesday.

    It forecasts the service sector to gradually recover during the year as consumer confidence is restored and tourism resumes from mid-2022 onward.

    But manufacturing will grow at a slower pace mirroring moderating growth in Vietnam’s main export markets of the U.S., the European Union and China.

    But it warned of the outlook of heightened risks from external economic shock, including the Russia-Ukraine conflict and new Covid-19 variants, slowing recovery of domestic demand, and labor shortage due to a surge in infections.

    “Additional shocks could lead to a low case scenario where GDP grows 4 percent in 2022, recovering to 6 percent and 6.5 percent in 2023 and 2024, respectively”.

    The World Bank recommended the Vietnamese government to deploy a strong fiscal policy support, and accommodative and prudent monetary policy.

    It was also cautious about economic and human capital consequences of inequality, which was driven up by the pandemic and lockdowns between last May and September.

    Vietnam’s economy grew by 2.6 percent last year, well below its pre-pandemic trend of 7 percent.

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  • Vietnam electricity prices go up again after two years

    Vietnam electricity prices go up again after two years

    Vietnam’s power prices went up 8.36 percent Wednesday after remaining unchanged for two years. A senior official of the Ministry of Industry and Trade told that prices have gone up from VND1,720 (7.4 cents) per kWh to VND1,864 (8 cents), exclusive of VAT.

    The ministry had said earlier this month that the Prime Minister had approved an increase in power prices. Vietnam’s power consumption has been increasing by about 10 percent each year, but generation has not kept pace.

    The hike could lower Vietnam’s GDP this year by 0.22 percent and increase its consumer price index (CPI) by 0.29 percent, the ministry said. Vietnam’s CPI increased 3.54 percent in 2018. Vietnam’s electricity prices have almost doubled in the last decade, but the last time they were raised was in 2017.According to Vietnam Electricity (EVN), its overall production costs rose by VND5.48 trillion ($235.46 million) year-on-year in 2018 mainly due to exchange rate differences in electricity purchase contracts and gas price increases.

    The utility expects costs to rise by VND15.25 trillion ($655.34 million) in 2019. This is not to mention other expected increases in costs of production, as well as coal and electricity imports, EVN said. Hoang Quoc Vuong, Deputy Minister of Industry and Trade, had noted earlier that Vietnam’s electricity prices were 8.1 percent lower than that of China and India, 18 percent lower than Laos and 26.5 percent lower than Indonesia. Even with the latest increase, the prices would only be on par with China and India, he said.

    “The fact that Vietnam’s electricity prices are lower than other countries is also why foreign investors are not interested in investing in electricity projects here,” he said. Vietnam, one of Asia’s fastest-growing economies, has been struggling to develop its energy industry. World Bank country director for Vietnam Ousmane Dione said at a recent forum that Vietnam would need to raise up to $150 billion by 2030 to develop its energy sector. Dione added that electricity demand in the country is set to grow by about 8 percent a year for the next decade.

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  • ​Vietnam to remain a fast growing Asian economy

    ​Vietnam to remain a fast growing Asian economy

    With a 2019 GDP growth of 6.9 percent, Vietnam will remain one of the fastest growing economies in Asia. “We remain positive on Vietnam’s medium-term growth on strong manufacturing activity as FDI inflows to electronics manufacturing remain strong,” says economist Chidu Narayanan of Standard Chartered Bank. According to a report recently issued by the bank, the country is likely to reach GDP growth of 6.9 percent this year.

    The manufacturing sector has expanded by double digits for most of the past four years and this pace is likely to continue in 2019, says the report.

    The bank expects manufacturing growth to remain strong this year, though mildly lower than in 2018. Strong FDI inflows to manufacturing will likely support robust manufacturing output, it says.

    Standard Chartered economists also forecast FDI disbursement to stay at $15 billion this year and FDI inflows to the manufacturing sector, particularly electronics manufacturing, to remain high in the medium term.

    FDI disbursement in Vietnam reached a record $19.1 billion in 2018, a year-on-year increase of 9.1 percent,  according to the Ministry of Planning and Investment.

    “Most macro-economic indicators improved in 2018, interest and foreign exchange rates were kept stable despite the Fed’s hike in interest rates and U.S.-China tension, and non-performing loans were well-managed below three percent,” says Nirukt Sapru, CEO Vietnam and ASEAN and South Asia Cluster Markets.

    “We believe that the Vietnamese economy will remain one of the fastest growing in Asia and likely the fastest-growing ASEAN economy in 2019.”

    The World Bank forecast that Vietnam’s GDP is likely to drop to 6.6 percent in 2019 and 6.5 percent in 2020. Meanwhile, the Asian Development Bank (ADB) estimates the country’s GDP for 2019 at 6.8 percent.

    Vietnam’s GDP growth of 7.08 percent in 2018 was the highest in a decade, according to the General Statistics Office.

  • World Bank sees slower global economic growth of 2.9% this year

    World Bank sees slower global economic growth of 2.9% this year

    The growth of the global economy is expected to slow to 2.9% in 2019 compared with 3% in 2018, the World Bank said on Tuesday, citing elevated trade tensions and international trade moderation. “At the beginning of 2018 the global economy was firing on all cylinders, but it lost speed during the year and the ride could get even bumpier in the year ahead,“ World Bank CEO Kristalina Georgieva said in the semi-annual Global Economic Prospects report.

    The World Bank outlook comes as the United States and China have been engaged in a bitter trade dispute, which has jolted financial markets across the world for months. The two economies have imposed tit-for-tat duties on each other’s goods, although there have been signs of progress.

    Growth in the US is likely to slow to 2.5% this year from 2.9% in 2018, while China is expected to grow at 6.2% in the year compared with 6.5% in 2018, according to the World Bank.

    Emerging market economies are expected to grow at 4.2% this year, with advanced economies expected to grow at 2%, the World Bank said.

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  • World Bank cuts Malaysia’s 2018 GDP growth forecast again

    World Bank cuts Malaysia’s 2018 GDP growth forecast again

    The World Bank has again revised downward its projection for Malaysia’s 2018 gross domestic product (GDP) growth to 4.7% from 4.9% after taking into account factors such the rigorous rationalisation of expenditure by the government and slowdown in private and public investment. It last cut the country’s GDP growth forecast in October, to 4.9% from 5.4%.

    Malaysia’s third quarter GDP growth moderated to 4.4%, bringing about a nine-month expansion of 4.7%.

    Despite a moderation in growth, the World Bank believes that the Malaysian economy remains resilient and continues to be anchored by private consumption, although it has been cooling down after the reintroduction of the sales and service tax.

    The key drivers for private consumption are stable labour market conditions, cost of living aid and tax refunds payment.

    Private investment in the manufacturing and commodity sectors are also expected to be sustained.

    Speaking at the launch of the World Bank’s Malaysia Economic Monitor on Realising Human Potential Report, World Bank Group economist Shakira Teh Sharifuddin said Malaysia’s economic growth is projected to remain flat at 4.7% in 2019, with external factors such as current trade tensions and increased volatility in the financial and commodity markets expected to weigh on the overall economy.

    In addition to the escalating trade tensions, monetary normalisation in advanced economies, high dependency on oil revenue and high level of public debt are seen as potential risk for the government.

    The percentage of the federal government’s revenue to GDP has seen a steep decline between 2012 and 2018, falling from 21.4% to 16.2%. In 2019, the share of revenue to GDP is expected to be reduced further to 15.1%.

    This, Shakira said, leaves the government with limited space to respond to economic shocks.

    In the near term, the government is expected to rigorously embark on fiscal consolidation measures with expenditure expected to decline to 18.1% of GDP from the 2018 estimate of 20.3%.

    Shakira said that while the introduction of new taxes in the budget is welcomed, the government should relook the incentive mechanisms.

    On another note, the World Bank stressed on the need for Malaysia to accelerate the development of its human capital if it wishes to join the ranks of a high-income nation.

    While Malaysia, which ranked 55th out of 157 countries in the Human Capital Index, fared well in some areas, there is room for improvement in certain areas, noted the report.

    It also states the prevalence of stunting among Malaysian children which affect more than one in five Malaysian children, a key indicator of malnutrition. In the absence of renewed efforts to develop human capital, a child born today in Malaysia will only reach a productivity level of 62%.

    In terms of education, the 12.2 years spent by Malaysians in school only equates to the 9.1 years learning outcome of school goers in the highest performing system.

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  • World Bank raises 2018 growth forecast for Vietnam

    World Bank raises 2018 growth forecast for Vietnam

    Vietnam’s economy might expand by 6.8 percent this year, the World Bank (WB) says in a new report, revising upwards its previous forecast of 6.5 percent in April.

    It estimates GDP at 6.6 percent in 2019 and 6.5 percent in 2020.

    The bank explained its upward revision on better prospects for the expansion of agriculture and production for exports, continued inflow of foreign direct investment thanks to bright economic prospects.

    If the actual growth rate matches projection, it will be the same as last year, which was the highest in a decade.

    In the first quarter this year, the economy expanded 7.38 percent, also a 10-year record, thanks to the strong growth in agriculture, industry-construction and service sectors.

    In an interview in April, Prime Minister Nguyen Xuan Phuc had said Vietnam will maintain its current economic growth until 2020 by giving private firms more room to grow and driving positive change in rural areas.

    He said Vietnam will facilitate an economic environment conducive for private firms to thrive, noting that they account for 43 percent of the nation’s GDP.

    The Vietnamese government will help by developing new policies, distributing resources, encouraging the creation of new enterprises and giving firms more opportunities to use modern technologies, said Phuc.

    “We will try to put in place the most favorable policies and create the most favorable environment so that by 2020, we will have in operation over one million businesses, accounting for 50 percent of Vietnam’s GDP, up from 43 percent at present,” he’d said.

  • World Bank Cuts 2018 Growth Forecast for Indonesia

    World Bank Cuts 2018 Growth Forecast for Indonesia

    The World Bank has cut its growth forecast for the Indonesian economy for this year to 5.2 percent from the 5.3 percent projected in March, amid volatile global financial conditions that have forced the central bank to tighten monetary policy.

    The Central Statistics Agency (BPS) said the Indonesian economy grew 5.06 percent year-on-year in the first quarter, far lower than the 5.4 percent target in the 2018 state budget, mainly due to household consumption, which remained stagnant.

    The projection by the Washington-based lender is in line with that by the Asian Development Bank and International Monetary Fund, which predict that the country’s economy will likely expand by 5.2 percent.

    “There is elevation of volatility in the global market starting in February, which put a lot of pressure on emerging markets, including Indonesia. So the first quarter was not as strong as we had expected,” Frederico Gil Sander, World Bank lead country economist for Indonesia, said.

    The rupiah dropped to a low of 14,202 against the US dollar last month – the weakest level since 2015 – amid a massive selloff on the Indonesian Stock Exchange (IDX) as global investors moved their capital into higher-yielding assets in the United States. The 2018 state budget assumes a rupiah exchange rate of 13.400 to the dollar.

    Foreign investors, who largely hold the most liquid assets on the IDX, have sold Rp 38.5 trillion ($2.9 billion) worth of stocks between January and May, which is only Rp 2 trillion short of the total for all of last year.

    In its first since November 2014, Bank Indonesia hiked its benchmark interest rate twice in two weeks last month to support the currency and stem capital outflows.

    However, there are fears that an early rate hike may lower spending by consumers and businesses as it makes lending more expensive. Growth in private consumption, which accounts for half of Indonesia’s economy, remained stuck at 5 percent in the first quarter.

    “We think consumption has stabilized at around 5 percent, and while it is not slow, some efforts are needed by the government to accelerate consumption,” said Sander, who was previously based in India.

    However, Indonesia is benefiting from rising commodity prices, including coal, one of the country’s key exports, which rose 25.6 percent on average in the first quarter. Indonesia’s coal benchmark, or HBA, was set at a six-year high of $101.86 in March.

    Last month, oil prices also hit their highest levels since November 2014, reaching almost $78 a barrel for global benchmark Brent crude.

    The higher commodity prices saw more investment, especially in machinery, equipment and vehicles. According to the Investment Coordinating Board (BKPM), Indonesia attracted Rp 185.3 trillion in investment between January and March, which was 11.8 percent higher than the same period last year. Of this, Rp 108.9 trillion was foreign direct investment, excluding banking and the oil and gas sector.

    The BKPM has set a total investment target of Rp 765 trillion for this year, which represents a 10.4 percent increase from last year. Rp 477.4 of this is foreign direct investment.

    The rise in investment increased import growth to 19.5 percent in the first quarter, compared with exports, which increased by 10.2 percent.

    Total imports reached $44 billion between January and March, with raw materials amounting to $32 billion, followed by capital goods and consumer goods, BPS data shows.

    Indonesia recorded a trade deficit for three months in a row between December and February, which swung to a surplus in March before returning to a deficit in April.

    Government consumption rose 12.9 percent in the first quarter – the fastest pace since 2016 – due to increased spending on social assistance, such as the Family Hope Program (PKH), which is aimed at reducing poverty and inequality. The cash transfer program is targeting 10 million of the country’s poorest families this year.

    According to Sander, the government’s infrastructure push, aimed at closing the gap between urban and rural areas, must continue while it should also work to improve the quality of human capital, including raising skill levels in the labor force to increase productivity.

    President Joko “Jokowi” Widodo’s administration has spent around Rp 905 trillion on infrastructure projects across the archipelago between 2015 and 2017, while the government has allocated a fifth of its budget, or Rp 1,167 trillion, to education in the same period.

    Finance Minister Sri Mulyani Indrawati last month predicted that the Indonesian economy would grow between 5.17 percent and 5.4 percent this year, while, Bank Indonesia predicted a growth rate of between 5.1 percent and 5.5 percent.

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