According to the local Newswire Bao Dau Tu (Vietnam Investment Review) on September 5, when building the plan for 2013, Ministry of Planning and Investment (MoPI) proposed the country’s GDP (gross domestic product) growth at only about 6%.

In fact, initially, there were two options given whereby GDP growth would be at 5.5 – 6 or 6 – 6.5%. However, finally, reasonable plan selected is 6 percent, to build other major balances of the economy.

Talking about this, Dao Van Hung, director of the Institute of Policy and Development (MoPI) said that, looking at the “unsolved obstruction” of the economy so far such as low credit growth and difficulties in production and business activities of enterprises, it is difficult to expect a higher growth rate in 2013.

In the overall goal of the socioeconomic development plan in 2013 drafted by MoPI to submit to the government, besides the two primary goals namely maintaining a reasonable growth rate and macroeconomic stability, for the first time, the issue “restoring the confidence of the business community and people in the investment and business environment” was mentioned.

According to the permanent deputy minister of planning and investment, Cao Viet Sinh, at the present time, the confidence of businesses is relatively low and not many businesses are willing to expand their business and investment.

“Just looking at the business results of about 700 listed companies on the stock market saw that if in the 2008-2011 period, pre-tax profit of these companies was always at 11 – 12%, in the first half of this year, the figure was only about 5%. Meanwhile interest rates are difficult to lower to below 10%, showing that the driving force for promoting production of enterprises in the remaining months of the year is very low and, therefore, it will affect economic growth in 2013 “, Hung said and leaned towards growth target of 5.5 – 6 percent in the next year.

Credit growth in the first eight months of this year was still low while social investment was not really as expected, which was considered the reason why economic experts worry about the completion of the economic growth target this year, as well as the ability to reach a high growth in the next year due to the lateness of policy to take effect. According to MoPI’s forecast, GDP growth for the first nine months of 2012 would be about 4.8 percent and for the whole year it is estimated at 5.3 – 5.6%.

Regarding the inflation target in 2013, worrying about the rule with two years of increase and one year of decrease, many experts expressed concern that inflation in the next year could be up to two digits. However, MoPI has finally set an inflation target in 2013 at equal to, or lower than in 2012 (about 7 – 8%).

Meanwhile, Nguyen Duc Thang, head of Price Statistics Department (General Statistical Office-GSO) said that the inflation target in 2013 should be set at one-digit level.

“In the first eight months of this year, inflation was only 2.86 percent and the room for regulation for the whole year is very big. In the remaining four months of this year, if the CPI (consumer price index) increases only 1 percent per month, for the whole year, inflation would be only about 7%”. But, as a rule, if inflation is low this year, it will be higher in the next year, in the current difficult economic context, inflation is very hard to be set at equal to or lower than that in previous year”, Thang said.

Vietnam Investment Review - September 5, 2012

Vietnam 2012 GDP seen at 5.2 pct, below earlier targets-govt

Vietnam would strive to keep its annual economic growth for the whole of this year at 5.2 percent, well below earlier government targets of 6.0-6.5 percent, following economic instability, low credit growth and high inventory, the government said.

Prime Minister Nguyen Tan Dung has asked ministries and provincial authorities to try to keep inflation this year at 7 percent, also below an initial target of 9 percent, a government statement issued late on Wednesday said.

Vietnamese banks' total outstanding loans rose an estimated 1.4 percent as of Aug. 20 from the end of last year, while money supply is estimated to have risen by 10.3 percent, the government said.

By Ngo Thi Ngoc Chau - Reuters - September 6, 2012