ADB forecast: Vietnam\'s economy to rise by 5.6% in 2014

Vietnam's economy is forecast to rise slightly from 5.4 percent in 2013 to 5.6 percent in 2014, picking up further to 5.8 percent in 2015 following economic recoveries in the United States, the Eurozone and Vietnam's progresses in addressing weaknesses in domestic banking sector, the Asian Development Bank (ADB) said Tuesday. The assessment was made by ADB in its Asian Development Outlook released Tuesday in Vietnam's capital Hanoi. Accordingly, Vietnam' s inflation in 2014 is estimated to stay at 6.2 percent, assuming reasonably stable food production, moderate policy stimulation and only slight depreciation of the Vietnamese dong. Changes in assumptions, or unexpectedly large price increases for subsidized goods and services would generate higher inflation, which is forecast to average 6.6 percent in 2015 as economic activity picks up. Banks will continue enjoying flexibility in restructuring overdue loans. Accelerating progress on resolving non-performing loans requires setting firm targets and closing the gap between national and international standards, the ADB said on its website. In 2014, the Vietnam Asset Management Company (VAMC) plans to purchase some 4.8 billion U.S. dollars worth of bad debt from banks. Challenges that the VAMC is facing include building sufficient capacity to undertake complex debt restructuring and pursuing the task with limited capital source. Effective mechanisms to evaluate and auction bad debts, and to auction mortgaged assets, have yet to be put in place. Changes in the regulatory framework and bankruptcy law are required to allow the VAMC to handle debt and related mortgages in a timely way, assessed the bank.