Grosss domestic product increased 5.03 percent in 2012, the General Statistics Office said in Hanoi today, down from a previously-reported 5.89 percent in 2011 and the slowest gain since 4.77 percent in 1999. The economy grew 5.44 percent in the fourth quarter, the data showed.

Vietnam’s economy has been hampered by slower lending as banks grappled with rising bad debt and under-capitalization. An export performance that the World Bank described as “strong” helped prevent an even sharper slowdown, as the country posted its first annual trade surplus in two decades.

“Exports made up for what was probably sluggish domestic demand,” said Jonathan Pincus, a Ho Chi Minh City-based economist with the Harvard Kennedy School’s Vietnam program. “It’s not a bad outcome considering all the deleveraging that’s going on, though in the long run this is not the type of growth that Vietnam would hope to attain.”

Prime Minister Nguyen Tan Dung said on Dec. 10 growth may reach 5.2 percent this year, down from earlier targets of as much as 6.5 percent. The trade surplus for the year was $284 million, based on preliminary figures from the statistics office today. The last time Vietnam recorded a positive balance was 1992, data show. Exports gained 18.3 percent to $114.6 billion in 2012, while imports advanced 7.1 percent to $114.3 billion.

The central bank said on Dec. 21 it would lower its refinancing rate to 9 percent from 10 percent, the sixth cut this year. The rate was 15 percent at the start of the year. The monetary authority also reduced the discount rate to 7 percent from 8 percent and capped the commercial lending rate for some sectors at 12 percent. The adjustments are to help companies “cope with difficulties in production and business,” it said.

Inflation slowed for the first time in four months in December, justifying the central bank’s reduction of interest rates to bolster economic growth. Prices rose 6.81 percent from a year earlier after climbing 7.08 percent in November, the statistics office said today.

By Jason Folkmanis & Nguyen Dieu Tu Uyen - December 24, 2012