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March 18, 2009

IMF revises Vietnam’s growth down to 4.75%

Economic growth in Vietnam is likely to slow to 4.75 percent this year, perhaps more, in the face of global economic turmoil, putting pressure on the exchange rate, Reuters quoted the International Monetary Fund as saying Tuesday.

In December, the IMF projected Vietnam's growth will drop to 5 percent in 2009.
Still, the Fund said that over the medium term the economic outlook for the country was favorable and Vietnam would remain an attractive investment destination.

"Economic growth is expected to slow in 2009 with capital inflows, exports, and private remittances likely to decline significantly, while the current account deficit will remain large," the IMF said.

It said risk aversion remained "acute" as foreign investors continued to reduce their portfolio exposures to Vietnam, particularly in bonds and the stock market.

Meanwhile, depreciation pressures on Vietnam's dong currency had resurfaced, it said.

The IMF urged the authorities to allow for greater exchange rate flexibility, and said IMF staff estimates show that the dong "appears somewhat overvalued compared with its estimated medium-term equilibrium level."

The Fund also said that the authorities should assess the effects of recent monetary adjustment before considering easing further.

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