Vietnam keeps growth target despite global woes

The government has said it will keep its economic growth target amid the global financial crisis, whose effect on the domestic economy has “not been significant” because links with US credit markets aren’t “profound.”

The central bank and government agencies were urged by Prime Minister Nguyen Tan Dung to ensure “safety and liquidity” in the banking system and monitor fluctuations in global markets closely, according to a statement posted on the government’s website.

The government in June cut its economic growth target to 7% for 2008, from an earlier goal of as much as 9%.

Expansion slowed as the central bank raised its benchmark interest rate to the highest in Asia to tame the fastest inflation in at least 16 years.

Growth in the US, the largest market for Vietnamese goods, has weakened as the financial crisis froze lending.

“Viet Nam has adequate conditions and measures to firmly maintain the stability of the macro economy and preserve its growth target,” Dung said, according to the statement. Viet Nam will “definitely overcome difficulties,” he said.

The economy expanded 6.5% in the first nine months of 2008 from a year earlier, down from 8.2% in the first three quarters of 2007.

Links between the US and Viet Nam are limited, ensuring that the US financial crisis hasn’t had a significant impact on the

Vietnamese economy, the government’s statement said.

Reserves

“Therefore the financial crisis hasn’t had a significant impact on the economy,” the statement said, citing the State Bank of Viet Nam. “Foreign-currency reserves have kept rising and there is no collapse in the banking system,” the statement said.

The nation would continue to give priority to controlling inflation, maintaining “tight monetary policy” and stabilizing the economy, the statement said.

Dung told the central bank to instruct commercial banks to review loans for investments in real estate to ensure “effectiveness,” the statement added.

The State Bank of Vietnam’s reserves rose to US$21.9 billion at the end of September from $20.7 billion three months earlier, Governor Nguyen Van Giau said September 30. The bank has 82% of the reserves deposited with central banks in the US, UK, France and Germany, the International Monetary Fund and other global financial institutions, Giau said. The rest is invested with banks with credit ratings of AAA or AA. (Bloomberg)