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June 9, 2008

Growth target set at 7-7.5% in 2009

Vietnam, which cut its 2008 economic growth target because of double-digit inflation and a soaring trade deficit, expects growth in 2009 of 7-7.5 percent, Reuters quoted the government as saying Monday.

Last month, Hanoi cut its 2008 growth target to 7 percent from a previous 9 percent. Annual inflation has been in double digits for seven consecutive months and hit 25.2 percent in May, while soaring import costs have tripled the trade deficit to $14.4 billion so far this year.

"The push towards an economic structure where industry and services have increasing shares will be continued," Prime Minister Nguyen Tan Dung said in a directive sent to ministries and government agencies on Monday citing the 2009 growth targets.

Dung also called for more investment in the agricultural sectors and greater rice output next year to meet high export demand.

Vietnam's market reforms have boosted growth and trade in the last decade, but the economy is showing strains of overheating, underlined by high credit growth in 2007.

Like other countries, it is struggling to deal with higher prices of food and energy. The country's inflation is the third highest in Asia after Myanmar and Sri Lanka.

Last week, Moody's downgraded its ratings outlook on Vietnam to negative from positive following similar moves by Fitch Ratings and Standard & Poor's to reflect the growing strains on the economy. But many economists believe Vietnam's long-term prospects remain sounds.

More on Vietnam


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