International press agencies have assessed that though the Vietnamese economy expanded at a year-on-year slower pace of 5.43% in Q1, the trend is only temporary.
Germany-based Deutsche Presse Agentur (DPA) attributed the slow economic growth rate to the decision, made by the State Bank of Vietnam to raise interest rates to rein in inflation.
Bloomberg reported that beside higher interest rates, the Vietnamese Government would tighten monetary and fiscal policies by cutting public investment, narrowing down budget deficit, boosting domestic production, and strengthening trade balance and lower credit growth target to less than 20%.
Bloomberg also quoted Sherman Chan, a Hong Kong-based economist at HSBC Plc as saying that “if the Government continues with fiscal and monetary tightening, then investors will soon return to Vietnam”.
HSBC forecasts that Vietnam’s GDP growth may reach 6.8% this year, compared with the government target of between 7% and 7.5%.
The Wall Street Journal recently said that Vietnam’s year-to-year economic growth slowed in the first quarter as agricultural output slipped, although economists say the lull is likely temporary and that further monetary tightening will be needed as surging inflationary pressures persist.
Meanwhile, the World Bank assessed that although the macroeconomic policies will likely make an economic slowdown in short term, but it will help Vietnam regain its pre-crisis growth potentials in medium term if those policies are implemented well. The WB also forecasted that the Vietnamese economy could grow 6.3% in 2011./.