HANOI: The World Bank on Monday forecast Vietnam's gross domestic product (GDP) growth for this year at 6.1%, but warned that banks' asset quality remained a concern.

The Southeast Asian country, a regional industrial hub, is targeting 6.5% GDP growth this year on expected external recovery and increased public investment, accelerating from last year's expansion of 5.05%.

"With continued export growth and signs of a real estate recovery, domestic demand is set to firm up in the second half of 2024 as investor and consumer sentiment improves," the World Bank said in a report.

However, asset quality has become a significant banking sector concern amid increasing non-performing loans (NPLs) and loan-loss coverage, the World Bank said, as NPLs have grown significantly from 1.9% in 2022 to 4.6% of total loans in 2023.

It said total problem loans could be as high as 7.9% if restructured loans and Vietnam Asset Management Company debts are included.

The World Bank also forecast Vietnam's headline inflation rate at 4.5% this year, compared with inflation of 3.2% last year, as higher food prices are expected to persist.

 - Reuters