Despite sluggish global growth, Vietnam’s economy is expected to continue to grow at a moderate pace and leave behind other big ASEAN nations in 2016.

Real GDP growth in the Southeast Asian country is projected to remain solid at 6.3 percent in 2016 and 6.1 percent in 2017, according to the latest Economic Outlook for Southeast Asia, China and India 2016 released by the Organization for Economic Co-operation and Development (OECD) on June 14.

The OECD report shows that Vietnam’s growth is estimated to fall by 0.4 percent compared to 2015, but still remain top of the ASEAN 5 (Indonesia, Malaysia, the Philippines, Thailand and Vietnam) and even higher than Singapore.

The OECD said that Vietnam’s growth rate could fall by 0.2 percent in 2017, equal to the Philippines, but continue to lead the other five largest ASEAN economies.

Real economic activity in Southeast Asia (ASEAN 10) is projected to grow at an average rate of 4.9 percent in 2016 and 5.3 percent in 2017. India’s economy is expected to grow at 7.4 percent while China’s growth is projected at 6.5 percent in 2016 as a result of the country’s ongoing process of rebalancing. Domestic demand is generally the main driver of economic growth in this region, said the update.

The less favorable external environment is a potential risk to countries in Southeast Asia as well as to China and India. The region is facing challenges due to weak growth prospects from OECD economies, China’s slowdown and recent financial volatility in emerging markets. Climate change, including the effects of drought due to the El Nino phenomenon, has had severe impacts on agricultural production in the region.

The report underlines that 2016 is an important milestone for the regional integration following the establishment of the ASEAN Economic Community (AEC) in December 2015.

The ASEAN Trade in Services Agreement (ATISA) will be created as a legal instrument to support ongoing efforts to liberalize the service sector. Additionally, ASEAN is taking crucial steps to establish the region as a single investment market and to improve competition policy and law. To date, progress in implementing competition and consumer protection policies has been uneven among member countries.

The biannual Economic Outlook for Southeast Asia, China and India contributes to the OECD Southeast Asia Regional Program that aims to strengthen the exchange of good practices and mutual learning among policymakers in OECD and ASEAN countries.