HANOI, June 15: Vietnam’s economic growth is forecast to slow to an annual pace of 4.31 percent in the first half of this year, even though second-quarter growth accelerated to an estimated 4.5 percent, Deputy Prime Minister Nguyen Xuan Phuc said on Friday.
Vietnam was also continuing to win the battle against inflation, with the consumer price index rising an estimated 3 percent in the first half, the lowest rate for the period in three years, said Phuc.
Vietnam has been struggling with the highest inflation in Asia, which peaked at 23.02 percent in August 2011. The government is targeting 7-8 percent for the full year.
‘Our economy has step by step passed a very difficult period, despite many barriers and challenges ahead,’ Phuc told a televised National Assembly session.
Vietnam’s gross domestic product grew 4 percent in the first quarter of this year, the slowest in three years. Growth was 5.57 percent in the first six months of 2011.
For the whole of 2012, the World Bank has forecast growth to slow to 5.7 percent from an expansion of 5.8 percent last year. Hanoi still aims for an annual GDP growth of around 6 percent, a target economists have warned is unlikely to be reached.
Rating agency Standard & Poor’s on Wednesday raised its outlook on Vietnam’s sovereign rating to stable from negative, citing its renewed confidence in the country’s price stability.
Vietnam will pump more cash into its economy in the second half of this year to help ease the funding burden faced by businesses so far this year, which would lead to annual credit growth of 12-13 percent for the whole of 2012, Phuc said.
Around 21,800 firms shut operation or closed down in the first five months of 2012, up 9.5 percent from a year ago, he said.
Between July and December, the government will pump 21 trillion dong ($1 billion) from state budget investment into the economy, translating into a credit growth of 2 percent per month, along with loans from commercial banks, Phuc said.
Vietnam initially aimed for an annual lending expansion of 15-17 percent, against growth of 14.4 percent last year, but loans have been growing very slowly so far this year, partly due to high interest rates and banks trying to avoid bad debt.
In May, lending in Vietnam had a positive growth for the first time after a negative expansion between January and April, Phuc told the parliament.
Bad debt has risen to 10 percent from 6 percent of the total loans in Vietnam, central bank governor Nguyen Van Binh said in state media reports last Friday. In November 2011 he said the ratio would be 3.6-3.8 percent of loans at the end of last year.
The Vietnamese government will speed up the restructuring process of banks, ‘adopting quick measures to deal with bad debt in the banking system and corporate bad debt’, Phuc said.
Last week the central bank said more mergers and acquisitions among banks will emerge soon as it aims to deal with weak banks.
(AGENCIES)
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