Twin targets race to top of agenda

Ministry of Planning and Investment (MPI) Minister Vo Hong Phuc said that Vietnam’s economy in 2011 would continue to face big external challenges.

“The world’s public debt crisis will continue undermining the economic growth of many countries. This will badly influence foreign direct investment flows and Vietnam’s foreign import and export markets. Therefore, our economy will face bigger pressures,” Phuc said.

According to the International Monetary Fund, the World Bank and the Asian Development Bank, the global economic growth for 2011 will be 4.02 per cent, lower than the 4.8 per cent reported in 2009 and 2010, he said.

Vietnam’s economy healthily grew in 2010 with its gross domestic product (GDP) rising 5.84, 6.44, 7.18 and 7.34 per cent in the first, second, third and fourth quarters respectively.

Overall, Vietnam’s GDP grew 6.78 per cent in 2010, higher than the National Assembly’s 6.5 per cent set target.

“We must take great caution in continuing driving the economy to ensure people’s lives and enterprises’ existence. Stabilising the economy must be a top priority in 2011,” Phuc said.

The National Assembly recently approved a resolution on 2011’s socio-economic development, in which the economy’s growth rate is targeted to be 7-7.5 per cent. The GDP per capita will be $1,300, while total export turnover will grow by 10 per cent year-on-year and trade deficit will not surpass 18 per cent of total export turnover.

The total development capital will occupy 40 per cent of GDP and the high inflation rate would be bridled at less than 7 per cent.

“Based on our estimations of market developments, investment and 2010’s growth, we think that the target of ensuring the GDP growth rate of over 7 per cent is feasible.

However, it will be hard for us to curb the inflation at less than 7 per cent. Inflation will be one of the biggest headaches for us in the new year,” Phuc said.

According to the MPI’s General Statistics Office, consumer price index (CPI) rise in 2010 exceeded prior targets, driven mostly by food and foodstuffs and housing costs.

“Vietnam’s big task was to curb inflation in 2010 and that will continue in 2011, especially during the early months of the year. We will find it more difficult to fight against inflation than we did in previous years, because production costs for 2011 are expected to be much higher, not to mention [anticipated] severer natural calamities and epidemics,” Phuc said.

Prime Minister Nguyen Tan Dung has asked ministries, provinces and cities nationwide to thoroughly review the uncompleted goals  set for 2010, including inflation control.

The State Bank said it would cut credit growth in 2011 to 23 per cent from 27 per cent in 2010 as part of its effort to cool off inflation.

It also targeted money supply growth of between 21-24 per cent in 2011, after 23 per cent in 2010.

Vo Tri Thanh, deputy director of the MPI’s Central Institute for Economic Management, said some foreign institutions forecasted that Vietnam’s inflation rate in 2011 would be 7-8 per cent, if the GDP growth rate would be 7.5 per cent.

“This shows that it will be very difficult to restrain inflation below 7 per cent for 2011 if we still strive for high economic growth rate,” he said.