Vietnam economy grows fastest in 2 yrs in Q4

VNStockNews.com - Vietnam's economy grew at its fastest pace in nearly two years in the final quarter of 2009 and the government put preventing hyperinflation atop of its list of challenges for next year.

Economists expect further monetary tightening as inflation accelerates but the central bank, keen to cement the recovery, said last week it was keeping interest rates unchanged in January.

Full year gross domestic product (GDP) grew 5.32 percent, its lowest rate since 1999 and about 2 percentage points below the average of the past decade, hobbled by soft demand for exports and weak investment, the General Statistics Office said on Thursday.

But in the fourth quarter the stimulus-fuelled economy leapt 6.9 percent from a year earlier, the quickest pace since the first quarter of 2008, compared with 6.04 percent growth in the third quarter. The economy expanded 4.8 percent in 1999.

The statistics office said in its annual report economic growth had been accelerating since the third quarter this year.

"Even though there were many limitations and shortcomings, the results achieved in 2009 affirm that our nation's economy has passed the most difficult period," it said in a statement.

The government had expected 5-5.5 percent growth. Next year's official target for GDP growth is 6.5 percent.

In the face of accelerating growth, the government said it must "firstly continue to actively prevent the return of hyperinflation and the existing potential inflationary factors".

Annual inflation picked up to 6.52 percent in December, its highest since April, from 4.35 percent in November, the government said last week. Last year, inflation topped out at about 28 percent in August when the economy overheated.
Inflation for 2009 stood at 6.88 percent in 2009.

The central bank raised interest rates and devalued the currency in late November in what economists said was a clear signal Hanoi was committed to maintaining macroeconomic stability. Last week, it announced that rates would stand pat in January despite calls for further monetary tightening.

The statistics office's number two task for the coming year was to "seize the opportunity of the global economic recovery to strengthen exports".

The trade deficit narrowed to $12.25 billion from last year's $18.03 billion, but exports fell about 10 percent.

Lower commodity prices helped bring export revenues down, even though some expanded. For instance, rice exports rose by more than 25 percent, but revenues fell 8 percent.

Crude oil exports fell about 2.4 percent in volume, but revenue from what has traditionally been Vietnam's biggest foreign currency earner slumped 40 percent in 2009 compared with 2008, the statistics office said. (Reuters)