News Room - Business/Economics

Posted on 27 Jul 2010

Economist' raises growth rate (Vietnam)

The UK Economist magazine's intelligence unit has lifted its forecast of Viet Nam's GDP growth rate in 2010 to 6.4 per cent from 6.2 per cent in its earlier analysis.

 

The recovery in the global economy has helped brighten Viet Nam's export sector, while a rise in imports suggests improved consumer confidence.

 

However, despite a rise in economic growth from 5.4 per cent in 2009, it is not expected that there will be a return to the heady pre-global recession rates of 8 per cent.

 

According to the Economist's intelligence unit, on the supply side, growth in the industrial sector will accelerate in the 2010-11 period, mainly driven by the foreign investment.

 

In the first six months of 2010, the industrial value grew 13.6 per cent year-on-year, with the foreign-invested sector posting growth of 17 per cent.

 

Nevertheless, growth in demand for Viet Nam's manufactured exports will remain sluggish over the next two years compared to the period before the global recession.

 

The Economist said that although foreign investors remained positive about Viet Nam's long-term prospects, investment in manufacturing would remain relatively low because of last year's financial crisis.

 

After receiving a boost in 2009 from low interest rates and a reduction in the cost of input materials, Viet Nam's construction sector grew by 11.5 per cent in the second quarter of 2010.

 

The construction industry will be helped in 2010-11 by the State's investment in infrastructure projects, as well as anticipated expansion of office space. Growth in the services sector, the engine behind the economic expansion in 2009, will also increase, with retail and financial services making major contributions.

 

The magazine also expects Viet Nam's consumer price index to rise from 7 per cent in 2009 to an annual average of 9.2 per cent in the 2010-11 period. However, it warned that rising inflation and relatively high unemployment could restrict the growth of consumer spending.

 

The World Bank recently forecast that Viet Nam's GDP could expand by 7 per cent in 2010, overtaking the Government's target of 6.5 per cent.