Vietnam PM Dung confident of 7% growth in 2010

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30 January 2010

Vietnam PM Dung confident of 7% growth in 2010

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Vietnam's Prime Minister Nguyen Tan Dung Friday said he was optimistic about domestic economic growth this year but left the door open for a further devaluation of the country's currency, reported the Dow Jones news wire.

Speaking at a press conference at the World Economic Forum here, Nguyen said he is confident that the Vietnamese economic growth will accelerate to 7 percent this year from 5.3 percent in 2009.

"The signs of recovery are very clear from the beginning of the year and we have every reason to predict that our GDP growth will reach 7 percent in 2010," Dung said.

Dung 's latest forecast is higher than the 6.5 percent expected by both his own government and the Asian Development Bank previously.

He also said he expects economic growth to bounce back to 7 percent -8 percent a year by 2011 and 2012, which is the average of the last two decades.

Despite rising consumer prices, Vietnam will be "fully capable" of containing inflation below 7 percent in 2010, Nguyen said.

Vietnam's consumer price index in January rose 7.62 percent from a year earlier, accelerating from 6.52 percent in December.

Answering a question on whether Vietnam will devalue its currency again this year, Nguyen said his country always applies a "very flexible" foreign exchange regime in order to help boost exports, cut its trade deficit and manage inflation.

"Our exchange rate policy always follows the principles of the market economy," he said, without elaborating.

In late November, Vietnam devalued its currency and raised interest rates, bowing to market forces that have pressured the dong in an attempt to curb inflation and reduce a drain on the country's foreign-exchange reserves.

The State Bank of Vietnam raised the tightly controlled dollar-dong exchange rate by 5.44 percent at that time, setting the dollar at 17,961 dong.

The central bank also raised its benchmark interest rate to 8.0 percent from 7.0 percent. This marks the third time in two years that Vietnam has devalued its currency.

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