Economy shakes off doubts

The Ministry of Planning and Investment (MPI), in a monthly government meeting held in Hanoi last week, tipped the economy to expand by 6.7 per cent year-on-year in 2010.

According to the General Statistics Office (GSO), the economy expanded 7.16 per cent year-on-year in the third quarter, raising economic growth in the first nine months to 6.52 per cent against the same period last year.

The MPI’s forecast is also similar to the Asia Development Bank’s (ADB) prediction last week in which growth was expected to reach 6.7 per cent. The ADB said macroeconomic stability, consolidated by the Vietnamese government, was the reason for its robust outlook. (Please visit vir.com.vn for related stories)

“The jump in the consumer price index (CPI) in September was high, but it is not a big concern. Inflation remains under control and that will not impact on economic growth in the next months,” Government Office Chairman and Minister Nguyen Xuan Phuc said.

Last month witnessed the highest CPI jump since February as it rose 1.31 per cent against August, or 6.46 per cent in comparison with December 2009, according to the GSO.

Due to the CPI’s sudden rise, Prime Minister Nguyen Tan Dung asked the State Bank to prioritise curbing inflation, while implementing monetary policies supporting growth.

The central bank last week revised Circular 13, which took effect from October 1, loosening banks’ deposit calculation method regulations to prevent tough capital mobilisation competition between local banks. The move is expected to support economic growth with local banks able to provide more loans to enterprises.

The central bank is also encouraging local banks to lower annual lending interest rates to around 12 to 14 per cent. However, State Bank vice governor Nguyen Dong Tien said the reduction in lending interest rates would be carefully implemented.

“The interest rate policy must be appropriate in two main goals including supporting economic growth and curbing inflation,” said Tien.

Prakriti Sofat, a Singapore-based economist at Barclay Capital, said inflation this year could hit 8.5 per cent. “It still remains fairly contained by historical standards,” she said.

According to MPI, the industrial production value rose 13.8 per cent on-year during the past nine months, 1.8 per cent higher than targeted early this year. The export turnover reached $51.5 billion, up 23.2 per cent on-year and four times higher than target set by the National Assembly.

“Vietnam is substantially benefiting from the rebound in world trade, which is projected to continue through 2011 at nearly the same pace as this year,” said Lei Lei Song, a senior economist at the Asia Development Bank.