Vietnam - Vietnam's GDP growth target seen hard to achieve in 2012

Policymakers have expressed concern that the gross domestic product (GDP) growth target of 6-6.5% this year will be hard to achieve given unfavorable changes in the early months.

“Some hold a pessimistic view that GDP growth would only stand at 4.5% this year,” said Cao Viet Sinh, deputy minister of planning and investment. However, he said “there are also other predictions that the GDP would grow 6%.”

The GDP growth of 4.1% in the first quarter is quite low compared to the average 5.7% in the same period in 2010 and 2011. This is a consequence of the monetary tightening policy shaped in Resolution 11, said Sinh.

“This rings a bell of alarm for laborers and social security,” noted the deputy minister.

Vu Viet Ngoan, chairman of the National Financial Supervisory Commission, echoed this view, saying GDP growth would hardly reach 6%.

He forecast GDP growth would slow down this quarter, as “history has proved that the GDP growth of the second quarter is never higher than that in the first one,” with the only exception being 2009 when a huge stimulus program was launched.

“We have calculated that GDP growth could only amount to 5.5-5.9% this year, but even this might be out of reach,” said Ngoan at the recent conference held by the Ministry of Planning and Investment.

He deemed the credit growth target of 15-17% as unachievable. Given the credit growth of minus 3% in the first quarter, he estimated the growth of the year’s first half could only reach at most 2-3%.

Therefore, the credit growth could hardly hit 12-13% in the second half to make up for the first half of the year. “If credit is loosened at year-end, inflation will surge again in early 2013. Therefore, it is difficult to achieve the credit growth target of 15-17%,” said Ngoan.

Meanwhile, deputy planning minister Sinh is worried about the liquidity of the banking system. Though the central bank has recently lowered the ceiling deposit rate to 12%, the gap in lending rates remains big, at 4-5 or even 6-7 percentage points.

Sinh revealed some 14,000 enterprises had gone bust by the end of last month, versus 12,000 as of March 21.

The Asian Development Outlook 2012 report recently announced by the Asian Development Bank (ADB) predicts that Vietnam’s economic growth will slow down to 5.7% in 2012 and then rise to 6.2% in 2013.

Inflation may be restrained below the double-digit level, provided that policies are strictly enforced, and then surge to 11.5% in 2013 in line with the high forecasts for economic growth and global food prices.

Saigon Times

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