SARS, Iraq will not derail Vietnam's growth: WB

SARS, Iraq will not derail Vietnam's growth: WB

Agence France-Presse, Hanoi

The short-term shocks of SARS and the Iraq conflict will not knock Vietnam's economic growth potential significantly off track this year, the World Bank said on Monday.

"Although the worst fears related to the war in Iraq did not materialize, there is still uncertainty about the economic implications of Severe Acute Respiratory Syndrome (SARS), said Klaus Rohland, its director in Vietnam.

"However, Vietnam has fundamental strengths that should enable the country to withstand these short-term shocks and keep its growth and poverty reduction efforts on track."

The World Bank, which is forecasting gross domestic product (GDP) growth in Vietnam of around seven percent this year, said the devastation caused by SARS on the country's once shining tourism industry could shave up to 0.5 percent of this figure.

"Whether this estimate materializes depends very much on whether Vietnam being the first country to contain SARS will help change public perceptions," it said in a statement.

On Monday, the health ministry declared that it has brought an outbreak of SARS in Vietnam under control after 20 days with no new infections, becoming the first country in the world affected by the deadly virus to have done so.

Ratings agency Standard and Poor's, in a compilation of analyst forecasts, has warned the deadly disease could trim between 0.1 and 0.5 percent from Vietnam's GDP growth this year.

"Our basic scenario is that SARS will have an impact on one financial quarter," said Takahira Ogawa, director of its Asia- Pacific sovereign ratings.

Economists say the growth rate could be revised further downwards if there is another outbreak of SARS in the Southeast Asian nation.

Meanwhile, the Asian Development Bank has forecast that Vietnamese exports will increase by 9.1 percent in 2003 and by 8.4 percent in 2004, mainly in response to the U.S.-Vietnam bilateral trade agreement which came into effect in December 2001.

But the bank warned in its regional outlook report for 2003 published on Monday that the war in Iraq could have a negative impact on Vietnamese rice and tea exports because the now ousted regime was a significant importer last year.

"Any fall in these two exports will have a direct bearing on the poorer sections of the population," it said.