ADB forecasts VN’s 2011 growth of 6.1 per cent

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At a press briefing to introduce its Asian Development Outlook (ADO) 2011 in Hanoi on April 6 the bank also said it expected growth to pick up again to 6.7 per cent in 2012 as a more stable economic environment stimulates consumption and investment.

Meanwhile, inflation is anticipated to remain high through 2011 averaging 13.3 per cent, before moderating to average 6.8 per cent in 2012.

In his opening speech, ADB Country Director for Vietnam , Ayumi Konishi, said the Vietnamese government is commented for the timely introduction of comprehensive policy measures to control inflation and restore macro economic stability under Resolution 11 in February.

If the Government effectively implements the resolution and communicates its implementation process to the people, the country’s macro economic stability can be restored, he said.

The effective implementation of Resolution 11 will slow Vietnam ’s near-term economic growth rate, however, the Government has to implement it as it takes time for the inflation numbers to come down, he added.

”Because monthly inflation rate was very low between April and September last year, it will not be easy for the month on month rate to come below the last year’s level - this means that even with successful implementation of Resolution 11, Vietnam’s inflation rate measured by “year on year” basis, will still continue to increase, and not decrease, in the next few months,” said the ADB Country Director.

He also added bringing down “year on year” inflation rate to a single digit by the end of this year will require the average monthly rate to below 0.4 per cent.

“Focusing on improving corporate governance and operational efficiencies of state owned enterprises will enable them to contribute effectively to Vietnam ’s sustainable rapid economic growth,” Konishi said, suggesting the Southeast Asian country focus on improving the efficiency of its economic systems, in order for it to deepen its regional integration and global value chains.

“Stability and efficiency will be the foundation of Vietnam ’s sustainable economic growth, and we are very confident about the strong potential of Vietnam over the medium term,” he said.

According to analysis, the State Bank of Vietnam (SBV)’s recent adjustment of Vietnamese currency has great impacts on the market. Raising petrol price is also necessary as petrol price in Vietnam was much lower than the world’s level before the adjustment.

There is also a risk that the supply of manufactured components from Japan for Vietnam ’s export industries could be disrupted by the impacts of the 11 March earthquake.

The ADO noted acceleration of Vietnam ’s growth to 6.8 per cent in 2010, supported by global economic recovery and accommodative monetary policy. Strong consumption growth of 9.7 per cent stimulated private sector investment, and industry sector expanded by 7.7 per cent and services grew 7.5 per cent.

The immediate challenge is to follow through on the policy tightening while the longer term one is to reinvigorate structural reforms, according to the ADO.