Citigroup: Vietnam’s economy stronger than expected

VNStockNews.com - Vietnam’s economic growth in the fourth quarter of 2009 exceeded market expectations and the country’s annual growth was stronger than the rest of Asia, excluding China, says Citigroup.

According to the General Statistics Office, Vietnam’s economy grew from a revised 6.04 percent in the third quarter to 6.9 percent in the fourth quarter of 2009, and at 5.32 percent for the whole year. This marked a strong rebound after a first-quarter growth of 3.14 percent.

Johanna Chua, head of Citigroup’s Asian economic research department, emphasised that Vietnam’s fourth-quarter economic growth was much stronger than expected. Previously, Citigroup had predicted that the annual growth could have reached 4.7 percent. Vietnam’s construction industry was helped by the strong monetary and fiscal stimulus, she said.

According to Ms Chua, credit growth increased to 38 percent in 2009 from 25 percent a year earlier. The export of electronic products and garments are also picking up, and overall Vietnamese exports should benefit from a weaker exchange rate this year.

She noted that the exchange rate of the Vietnamese Dong (VND) to the US dollar (USD) fell to VND18,479/USD by the end of last year. However, the Vietnamese currency’s weakness may lead to inflation.

In addition to raising its benchmark rate to around 9 percent, the State Bank of Vietnam can also abolish or adjust a number of regulations that place a ceiling on just how much interest lenders can charge borrowers, she suggested.

As planned, Vietnam will raise almost US$1 billion from selling 10-year term bonds in 2010. The three banks, namely Citigroup, Barclays Capital and Deutsche Bank will conduct these transactions. In 2005, the country attracted US$750 million from the global markets.