US financial giant Citigroup Inc. said on Jan 5 that Vietnam ’s fourth-quarter growth exceeded market expectations and the country’s full-year expansion was “far more resilient” than the rest of Asia with the exception of China.
The economy expanded 6.9 percent on-year in the fourth quarter, up from a revised 6.04 percent in the third quarter, and grew 5.32 percent for the full year, according to figures released last week by the General Statistics Office in Hanoi . This marked a rebound after first-quarter expansion of 3.14 percent, the slowest on record.
Johanna Chua, the Hong Kong-based head of Asian economic research at Citigroup, said Vietnam 's fourth-quarter economic growth was “much stronger than expected", adding that the country’s construction industry in particular was helped by “strong monetary and fiscal stimulus".
Credit growth accelerated to about 38 percent last year from 25 percent in 2008. Shipments of electronic products and garments are rebounding, and overall Vietnamese exports should benefit this year from a weaker exchange rate, Chua said.
However, she warned of rising inflation risks in Vietnam . The exchange rate of the Vietnamese dong against the dollar fell to 18,479 by the end of last year from 17,483 at the end of 2008. The currency’s weakness has probably already fed into inflation.
Thus, according to Chua , Vietnam 's central bank will need to increase its benchmark interest rate again. In addition to raising its benchmark rate to as much as 9 percent, Vietnam ’s central bank may also abolish or revise a regulation that places a ceiling on how much interest lenders can charge borrowers./.