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March 7, 2009

Vietnam: Growth seen falling to 4.5% in Q1

Vietnam’s economic growth rate in the first quarter of this year is likely to slow to 4.5 percent, much lower than the 7.4 percent for the same period last year, said Le Dinh An, director of the National Social Economic Forecasting Center in a interview with Chia’s state news agency Xinhua on Friday.

The lower growth rate is attributed to the impacts of the ongoing global economic crisis on Vietnam's economy, which caused drops in industrial production, exports, and foreign direct investment (FDI) in the first two months of this year, said An.

Latest figures from the General Statistics Office of Vietnam (GSO) showed that industrial production in the last two months increased by just 2.5 percent, the slowest growth rate in recent years due to the impact of the global financial crisis.

Sharp declines were seen in major industries including steel, footwear, motorbikes and televisions. Massive 50 to 60 percent decreases in production have been reported for some products like air conditioners, glass and automobile tires, local newspaper Vietnam News reported.

As for the exports, figures from the GSO showed that export turnover in the first two months decreased by 5.1 percent due to shrinking demands in major markets like the US, Japan and European Union.

Additionally, foreign direct investment, in both newly-registered and previously- licensed projects, stood at $5.3 billion in the first two months, down by 30 percent against the same period last year.

Speaking of the solution to inject impetus to the economy, An said the government has made the right move to grant loans with subsidized interest rates of four percent to local companies. He expected more companies, especially small-and-medium sized enterprises, could acquire these low interest loans to boost production.

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