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HO CHI MINH CITY, July 19 (Xinhua) -- The World Bank (WB) stated on Tuesday that Vietnam is confronting various challenges, including those relating to economic growth, Brexit impacts, aging population, demographic transition speed and healthcare systems.
The WB made the statements in its latest publication in Vietnam, "Taking Stock: An Update on Vietnam's Recent Economic Developments, July 2016".
According to the bank, Vietnam's medium term outlook remains positive, but subject to risks. The country's GDP is projected to grow by 6 percent in 2016 with inflationary pressures contained and the current account in balance.
Meanwhile, Vietnam's fiscal deficit is projected to remain high this year, but then tighten over the medium term, reflecting the Vietnamese government's fiscal consolidation plans, said the bank.
On the domestic front, slow progress in implementing structural reforms to boost productivity in both the state-owned and private sector pose risks to medium-term growth prospects, while delays in addressing lingering non-performing loan problems in banking sector and fiscal consolidation could pose a risk to future macroeconomic stability and growth, it said.
More volatile global financial conditions, including a further weakening in the U.S. and EU economies, could dim Vietnam's growth prospects, the WB predicts.
Meanwhile, Vietnam is projected by the bank to begin aging at a very rapid pace. As of 2016, around 7 percent of the Vietnamese population, or around six and a half million people, are 65 years old or older, and over 10 percent are 60 and older. By 2040, the number of people at 65 and older is projected to almost triple to 18.4 million, and to account for 17 percent of the population.
"The speed of aging in Vietnam is among the fastest seen globally to date, and is happening at much lower income levels than currently old countries. An important consequence of these trends is the impact on the labor force," the WB states.
The working age population of Vietnam is expected to shrink by around 5 percent as a share of total population between now and the early 2040s, though the absolute number of working age population will not peak until around 2038 at just over 72 million (from the current 66 million) before declining steadily.
The speed of demographic transition in Vietnam poses new challenges for policymakers, employers and citizens, some of them urgent. Rapid aging will require policy action and behavioral change in a number of areas, it said.
In labor markets, the challenge is to prepare for the structural decline in working age population and to enhance labor productivity of the shrinking labor force. In fiscal terms, the biggest risk will be financial sustainability of the pension system and its current low coverage.
"There are also significant challenges for healthcare and aged/long-term care systems. The health delivery system will require a fundamental reorientation towards more emphasis on primary care and reduced reliance on hospital care in order to manage the increase in non-communicable diseases exacerbated by aging," the WB forecast.
There will need to be reforms of human resource policies and programs for the health sector, requiring new graduate and post-graduate training programs for general practitioners, as well as retraining of existing cadres. Enditem
