HANOI (Reuters): Vietnam's economic growth is expected to slow to 6.8% this year from an expansion of 8% last year, the World Bank said on Friday.
The country's outlook remains solid but risks remain elevated in the near term, the bank said in a statement.
* "Softer global conditions are making Vietnam's external environment more challenging, with the oil shock adding to the downside risks," WB director for Vietnam, Mariam J. Sherman, said.
* Vietnam targets annual GDP growth of at least 10% for this year and the rest of the decade.
* The country is facing inflationary pressures triggered by the Iran war, leaving April inflation higher than the government's target of 4.5%.
* The WB forecasts Vietnam's 2026 inflation at 4.2%.
* Vietnam's banking sector has come under funding strains with credit growth outpacing deposit mobilisation, the WB said.
* A prolonged Middle East conflict could depress Vietnam's exports and exacerbate banking sector and currency pressures amid high corporate leverage and limited foreign exchange reserve cover, it said.
* The WB urges Vietnam to shift its growth model from factor accumulation and bank-led finance to productivity-driven growth, deeper capital markets and higher-quality FDI. (Reporting by Khanh Vu; Editing by David Stanway) -- Reuters
