VINACHEM

The target was set by the Government and approved by the National Assembly earlier this year.

The cabinet meeting in August predicted that Viet Namwould grow at 6.7 per cent, backed by strong growth in the last twoquarters.

Thanh said the target was very possible to realisebecause the Government had implemented favourable macro economic growthpolicies, and Viet Nam could benefit from the global economic recoveryin the coming months.

Several experts and economic institutions shared thesame positive perspective. Standard Chartered Bank specialists, intheir latest outlook on the Vietnamese economy issued in September,forecast that Viet Nam would achieve a GDP growth rate of 7.5 per centin the last quarter of the year.

This would mean annual GDP growth for 2010 would reach 6.7 per cent.

While the GDP growth rate forecast is not higher thanprevious projections, the outlook in terms of inflation is morepositive, reducing from 11.5 per cent to 8.5 per cent for 2010.

Standard Chartered Bank expects that Viet Nam will grow at 7.2 per cent during 2011.

Le Xuan Nghia, deputy director of the NationalCommittee for Economic Monitoring, said there was a very highlikelihood that Viet Nam would attain an annual GDP growth rate of 6.7per cent by the end of this year.

But he expressed concern over current interest rates.

"The current interest rate is too high for enterprisesto access bank loans," Nghia said at a seminar on the effects of theglobal financial crisis on the Vietnamese economy held in HCM City thisweek.

The IMF's latest assessment of the Vietnamese economy also forecast sustained recovery.

"If these favourable conditions [government's macroeconomic policies] are sustained, the Government's objectives for 2010appear within reach. We project real GDP growth at 6.5 per cent,supported by a continued recovery in private investment, consumption,and non-oil export growth," said IMF Staff Representative at the VietNam – Informal Mid-year Consultative Group Meeting in June.

The Asian Development Bank (ADB) in its monthly AsiaEconomic Monitor for July 2010 forecast that Viet Nam would achieveannual GDP growth of 6.5 per cent in 2010 and 6.8 per cent in 2014.

"Growth in the first half of 2010 indicates Viet Namis on track to achieve its targeted 6.5 per cent growth for the year,"the ADB said in its monthly economic review.

"Expected annual GDP growth in 2010 will range from6.5 – 6.8 per cent," said Pham Thanh Binh, head of Research,PetroVietnam Securities.

Macro-economic risks

Thanh said despite positive economic indicators,policymakers needed to pay closer attention to the risk ofmacro-economic instability.

"Most of the inflation forecasts are around 8 – 8.5 per cent, which is still a high figure," he said.

At the beginning of the year, the National Assemblyexpected the annual inflation not to exceed 7 per cent. The Governmentafter that extended the target to 8 per cent.

Other indicators such as the balance of trade andState budget deficit have seen positive changes; but those areshort-term results and can prove volatile due to the impact ofinternational factors.

The IMF also issued similar warnings. "The currentfavourable conditions are still fragile, and confidence that recentmacro-economics stability will be sustained remains weak," thestatement said.

Thanh argued that the key issue in the Vietnameseeconomy did not totally lie in inflation figures or trade deficit butit was also about the consistency of the Government's policy message.

"Economic policies have been see-sawing betweenprioritising economic growth and stabilising the economy, which in someways has lessened policy predictability and investor confidence," Thanhsaid.

The IMF statement also called for more consistency in economic policies.

"Much of the current uncertainty over the short-termoutlook stems from mixed signals over the direction of monetary andfiscal policy in the immediate period ahead," IMF statement in Junesaid.

(Source: VNS)