Vietnam's economic growth estimated at 5% in 2009, says Standard Chartered

VNStockNews - Standard Chartered Bank on Feb 17 predicted that Vietnam's economic growth will be 5% in 2009, lower than the government's forecast of 6.5% because of the decrease in the export turnover, Foreign Direct Investment (FDI) capital and overseas remittance.

Speaking on the Asian economic future in Hanoi, Cheung Tai Hui—head of South-eastern Asia Economy Research Division of Standard Chartered confirmed that exports of Vietnam as well as Asian countries are declining because of the global economic crisis starting last September.

Accordingly, the FDI inflow into Vietnam will also fall in line with the economic depression of developed countries. Foreign invested companies will tighten up their financial investments more and re-consider business expansion plans. However, the good news for Vietnam in this difficult context is that the country can curb inflation at low level and control trade deficit, he added.

Trade gap will not be a problem for Vietnam. Inflation could be one-digit by the middle of this year. Although the export turnover in January 2009 reduced by 25% year-on-year, the falling trade deficit will not be a cause for worry for Vietnam this year, Tai Hui expected.

Concerning the Vietnamese government's monetary policies, Hui confirmed that Vietnam has taken positive steps aimed to cut down interest rates and step by step devalue the dong to curb inflation. Since the end of 2008, State Bank of Vietnam for sometime lowered the basic rates and recently the rate was down from 8.5% to 7% pa. The decreasing tendency of basic rates could be continued in the following months to boost exports.

He also assessed that Vietnam's US$6 billion financial stimulus package is an optimistic start in boosting the economic growth. Measures of adjusting income taxes (including PIT and CIT) will create the necessary economic stability.

Asian countries' export will keep declining until the last half of 2009, even 2010. However, in long-term, the nations' economic prospect will still be attractive for the global investors, Hui concluded.