Vietnam's economic growth to slow to 5pc next year: IMF

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HANOI, Dec 4 (AFP): The International Monetary Fund (IMF) predicted today that Vietnam's economic growth will slow to five per cent next year, below the communist government's 2009 target of 6.5 per cent.
The gross domestic product (GDP) growth rate would be a sharp drop from last year's 8.5 per cent and would come as global economic turmoil and falling oil and commodity prices impact the Southeast Asian developing county.
"We expect real GDP growth to moderate to five per cent in 2009, from 6.25 per cent in 2008," said IMF Assistant Director for the Asia and Pacific Department Shogo Ishii, speaking at a donors' conference in Hanoi.
Ishii said the outlook "is subject to a number of downside risks."
"Being a small, open economy, a deeper global downturn-especially in advanced economies which account for the bulk of Vietnam's total exports and remittances-will have a material impact on Vietnam," he said.
The IMF senior official also warned that "tighter global financial conditions would reduce foreign direct investment and other capital inflows, which are needed to finance a large current account deficit."
Vietnam's government predicts GDP growth of 6.7 per cent for this year and 6.5 per cent for next, after the export-led economy has been battered by global and domestic economic turmoil, including double-digit inflation.
Consumer prices rose sharply this year but the increases have levelled off from a peak of 28.3 per cent year-on-year in August to 24.2 per cent in November as international energy and commodity prices have dropped off. Ishii predicted inflation would drop back below 10 per cent late next year.
"Headline inflation will fall sharply to single digits by end-2009 mainly due to lower commodity prices, although core inflation-excluding raw food and energy items-may fall more gradually, as expected large wage increases feed through the system," Ishii told the Consultative Group donors' meeting.