HANOI, April 13 (Xinhua) -- Vietnam's economy will grow around 6.5 percent in 2018, local media on Friday quoted the World Bank forecast as reporting.

According to the East Asia-Pacific Economic Update recently released by the World Bank, Vietnam's economy is facing significant challenges, despite the generally favorable medium-term outlook, newspaper Dau Tu (Investment) reported.

"Domestically, a slowdown in structural reforms could weaken the ongoing recovery and weigh on Vietnam's medium-term potential growth. There is also a risk that fiscal consolidation may erode pro-poor fiscal expenditure and investment in human and physical capital. Externally, strong trade and investment links expose Vietnam's economy to risks associated with a potential rise in protectionism and a possible weakening of external demand," the World Bank said.

The risks call for further steps to enhance macroeconomic resilience, including more exchange rate flexibility, a further buildup of foreign reserves, and responsive monetary and macro-prudential policies that moderate credit expansion and bolster capital buffers in the banking sector, the bank suggested.

On the fiscal front, there continues to be a need for deeper revenue and expenditure reforms, including broadening tax bases, right-sizing of the public administration, and higher value for money in public investment, the World Bank said.

According to the bank, steps to solidify macroeconomic stability need to be accompanied by progress on structural reforms to lift productivity and potential growth, including steps to reform the state-owned enterprise sector, improve the regulatory environment, and enhance factor markets, including land and capital.

Vietnam's gross domestic product (GDP) will grow to 7.1 percent this year, before easing back to 6.8 percent in 2019, said the Asian Development Bank in a new report launched on Wednesday.

Vietnam's GDP grew 7.38 percent in the first quarter of this year, according to the country's General Statistics Office.

Vietnam's top legislature targeted GDP growth of 6.5-6.7 percent in 2018. The growth rate was 6.81 percent in 2017.