ADB urges Vietnam to narrow workforce skills gap to remain strong growth
Vietnam should make effort to take use of its young and well educated labor force, said a report of the Asian Development Bank (ADB) launched today.
According to the paper, Vietnam is set to continue its strong economic performance, with GDP growth forecast to rise to 7.1% this year, before easing back to 6.8% in 2019.
ADB Country Director for Vietnam Eric Sidgwick believes in the country’s strong performance this year, aided by able macroeconomic management, economic growth will spurt in 2018. “Vietnam’s robust economic growth will be driven by vigorous manufacturing and export expansion, rising domestic consumption, strong investment fueled by FDI and domestic enterprises, and an improving agriculture sector,” he added.
The Asian Development Outlook (ADO) 2018 forecasts inflation to reach 3.7% on average this year, up from 3.5% in 2017, before edging up to 4.0% in 2019, as domestic demand and global commodity prices rise.
Director Sidgwick noted: “A broad based increase in the government revenue effort in 2017, helped curtail the budget deficit and reduce total public debt to 61.3% of GDP by the end of 2017, from 63.6% a year earlier. This fiscal consolidation combined with moderate inflation should provide for continued macroeconomic stability.”
While highlighting Vietnam’s strong growth potential, the report notes several major risks to the outlook including rising global trade protectionism.
Vietnam’s annual trade now exceeds 185% of GDP, making it the second most trade dependent economy in South East Asia, behind Singapore. A major disruption in trade between two of Viet Nam’s largest trading partners, the US and China, could have spillover effects on economic growth, the report noted.
The report also recommends greater efforts to address Vietnam’s skills gap to ensure growth remains sustainable and equitable. “Vietnam has been able to mobilize an abundant supply of young, well educated, workers to attract foreign investment into labor-intensive manufacturing over the last decade,” said Sidgwick. “However, as the Vietnamese economy becomes more sophisticated a gap between worker qualifications and business needs has emerged and is widening. If not addressed, this skills gap could become a major obstacle to Vietnam’s development aspirations”, he added.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members—48 from the region.
ADB Country Director for Vietnam Eric Sidgwick believes in the country’s strong performance this year, aided by able macroeconomic management, economic growth will spurt in 2018. “Vietnam’s robust economic growth will be driven by vigorous manufacturing and export expansion, rising domestic consumption, strong investment fueled by FDI and domestic enterprises, and an improving agriculture sector,” he added.
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The Asian Development Outlook (ADO) 2018 forecasts inflation to reach 3.7% on average this year, up from 3.5% in 2017, before edging up to 4.0% in 2019, as domestic demand and global commodity prices rise.
Director Sidgwick noted: “A broad based increase in the government revenue effort in 2017, helped curtail the budget deficit and reduce total public debt to 61.3% of GDP by the end of 2017, from 63.6% a year earlier. This fiscal consolidation combined with moderate inflation should provide for continued macroeconomic stability.”
While highlighting Vietnam’s strong growth potential, the report notes several major risks to the outlook including rising global trade protectionism.
Vietnam’s annual trade now exceeds 185% of GDP, making it the second most trade dependent economy in South East Asia, behind Singapore. A major disruption in trade between two of Viet Nam’s largest trading partners, the US and China, could have spillover effects on economic growth, the report noted.
The report also recommends greater efforts to address Vietnam’s skills gap to ensure growth remains sustainable and equitable. “Vietnam has been able to mobilize an abundant supply of young, well educated, workers to attract foreign investment into labor-intensive manufacturing over the last decade,” said Sidgwick. “However, as the Vietnamese economy becomes more sophisticated a gap between worker qualifications and business needs has emerged and is widening. If not addressed, this skills gap could become a major obstacle to Vietnam’s development aspirations”, he added.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members—48 from the region.
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