VINACHEM

Vietnam’s planning ministry said that economic growth may slump to as low as 5.2 percent in 2012,which would be the slowest pace in more than a decade.

The economy has been buffeted this year by a credit crunchafter the central bank pushed up interest rates last year tofight the fastest inflation in Asia, and with some Vietnamesebanks’ ability to lend constrained by a lack of capital amidconcern about the health of the financial system.

The economy grew 4 percent in the first quarter, theslowest since 2009. The pace of expansion for the full year maybe in a range of 5.2 to 5.5 percent, with second-quarter growthlikely to reach about 4.5 percent, Deputy Minister of Planning &Investment Cao Viet Sinh, said in an interview yesterday at aconference in the central Vietnamese town of Dong Ha.

“Looking at slowing industrial indicators and thedifficulties that businesses are facing, we can see that it willbe very difficult in the second half,” said Sinh. “But thegovernment still wants to stick with the 6 percent target fornow and wait to see what growth in the third quarter will be,before making any changes in the target.”

The pace of growth in the second half of the year may reachabout 6 percent, as the government plans measures includingincreased state spending to boost consumption, Sinh said.

“We want to see the impact of the measures to helpbusinesses, and we will also want to see the consumption and industrial indicators in the third quarter,” Sinh said.

The last time Vietnam’s economy grew less than 5.2 percentwas in 1999, when gross domestic product expanded by 4.8percent, according to figures from the General Statistics Officein Hanoi.

“Vietnam has entered a phase of sluggish growth,” the World Bank said, in a report released yesterday at theconference. The “growth rate has been trending downward for thelast five-six years, largely on account of the slow pace ofstructural reforms,” the lender said, citing inefficiencies instate-owned companies, banks, and public investments.

Vietnam’s central bank should prioritize containinginflation and be cautious about lowering interest rates further,the International Monetary Fund said yesterday.