Sunday, October 07, 2007

Vietnam’s nine-month growth strongest in a decade

HANOI: Vietnam’s economy expanded 8.16 percent in the first nine months of this year from a year earlier, the strongest growth for the period in a decade, the government said on Friday.

The figure showed growth was running below the government’s full-year target of 8.5 percent.

Growth in the third quarter accelerated to 8.69 percent against the year-earlier period, from 7.98 percent in the second quarter and 7.73 percent in the first three months, a General Statistics Office report said.

If growth in the last quarter reaches 9 percent to 9.5 percent, Vietnam’s annual gross domestic product (GDP) would rise 8.4 percent to 8.5 percent this year, it said.

Vietnam needs to boost market reforms to ensure sustainable growth as its fast-expanding economy has triggered high inflation, a soaring trade deficit and widening income gaps, economists say.

Inflation last month was 8.8 percent from September 2006, while the nine-month trade deficit more than doubled to $7.6 billion from $3.4 billion in the same period last year.

“What matters more than reaching a specific target in one year is the pursuit of sustainable growth through continued adherence to prudent macro-economic policies, coupled with market-friendly reforms,” outgoing IMF representative Il Houng Lee was quoted by Thursday’s Vietnam News daily as saying.

He said Vietnam would achieve growth of at least 8 percent in coming years.

Growth in industrial and construction sectors of 10.15 percent was a major factor behind the 8.16 percent overall expansion, the statistics office report said. The service sector followed with a 8.54 percent rise. The agricultural, fisheries and forestry sectors expanded only 3.02 percent in the first nine months from a year earlier, after a decline in rice production, bird flu and pig diseases that have stunted the sector’s performance, the report said.

It did not detail government spending as one of the four GDP components under expenditure. The net export value in the first nine months is at a deficit of $7.6 billion. Using the same criteria, GDP is also measured by adding up the values of investment and consumption. January to September’s investment rose 16.3 percent to 334.8 trillion dong ($20.7 billion), while consumption, defined by the statistics office as ‘retail sales of goods and services’, rose 22.8 percent to 520.5 trillion dong ($32.2 billion).

The nine-month GDP value reached 787.23 trillion dong ($48.7 billion), based on current prices.

The Asian Development Bank (ADB) said investment stimulated by Vietnam’s accession to the World Trade Organisation in January has been the main driver of growth, along with consumption.

Wages increased, especially given a shortage of skilled workers, plus rising remittances from overseas have supported consumption, an ADB report in September said. It forecast Vietnam’s growth this year at 8.3 percent.

Vietnam’s GDP expanded 8.17 percent in 2006, making the economy one of the world’s fastest growing. reuters