Viet­nam’s econ­omy grew at fastest pace in three years

The Pak Banker - - I Nternational -

HANOI: Viet­nam's econ­omy grew at its fastest pace in three years in 2010, ac­cord­ing to an of­fi­cial es­ti­mate re­leased Wed­nes­day, de­spite con­cerns over high in­fla­tion, a strug­gling cur­rency and its cur­rent ac­count deficit.

Gross do­mes­tic prod­uct (GDP) ex­panded by roughly 6.8 per­cent com­pared with 5.3 per­cent the pre­vi­ous year, the slow­est rate in a decade, the Gen­eral Statis­tics Of­fice (GSO) said in a year-end re­port. The econ­omy grew 6.3 per­cent in 2008 and 8.5 per­cent in 2007.

GSO fig­ures showed that growth ac­cel­er­ated through­out this year, ex­pand­ing in the fourth quar­ter by an an­nu­alised 7.3 per­cent.

"These re­sults con­firm the ef­fec­tive­ness of mea­sures and so­lu­tions taken firmly and vig­or­ously by the govern­ment to pre­vent eco­nomic slow­down and to sta­bilise the macroe­con­omy," the GSO re­port said.

The fig­ures beat the govern­ment's tar­get of 6.5 per­cent growth this year. It is aim­ing for seven per­cent ex­pan­sion in 2011. Re­cov­ery in in­dus­try, con­struc­tion and agri­cul­ture, co­in­cided with stronger ex­ter­nal de­mand to boost the coun- try's growth rate, the World Bank said in a re­port this month.

But com­mu­nist Viet­nam's im­pres­sive growth has been ac­com­pa­nied by in­creased eco­nomic risks such as fall­ing for­eign ex­change re­serves, high in­fla­tion, a strug­gling cur­rency, and a rel­a­tively high cur­rent ac­count deficit, the broad­est mea­sure of ex­ter­nal trade, the World Bank said.

"So Viet­nam, de­spite be­ing one of (the) most dy­namic coun­tries in the re­gion, finds it­self an ex­cep­tion to the broader emerg­ing mar­ket trend of stronger cur- ren­cies, ro­bust cap­i­tal in­flows and ris­ing for­eign ex­change re­serves," it said.

In­fla­tion hit 11.8 per­cent in De­cem­ber on a year-on-year ba­sis, ac­cord­ing to a GSO es­ti­mate. The dong has been de­val­ued three times since late last year. Next year the coun­try will fol­low a more flex­i­ble ex­change-rate regime while us­ing mon­e­tary pol­icy to curb in­fla­tion, the cen­tral bank said Wed­nes­day.

Sig­nalling a pos­si­ble in­ter­est-rate hike and an­other cur­rency de­val­u­a­tion, State Bank of Viet­nam Gover­nor Nguyen Van Giau said the ex­change rate will be based on mar­ket con­di­tions and in­ter­est rates, and should be used to help boost ex­ports and re­duce im­ports.

The GSO on Tues­day re­ported that Viet­nam's trade deficit stayed rel­a­tively steady at 12.4 bil­lion dol­lars this year, as ex­ports surged more than im­ports. Rat­ings agen­cies Moody's and Stan­dard & Poor's re­cently down­graded their eval­u­a­tions for Viet­nam over wor­ries about the econ­omy, the bank­ing sec­tor and the prob­lems of nearly-bank­rupt ship­builder Vi­nashin, a sta­te­owned firm. -Afp

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