National economy 2009: high inflation remains biggest worry

7.8% per annum in GDP growth rate for 2006-2008 

2008 has been the year to review the first half of the process of implementing the socio-economic development plan for 2006-2010. Meanwhile, 2008 has also been the year when the national economy has faced a lot of challenges due to the global financial crisis and high inflation. This has also been a year in which the economic growth rate was not able to be achieved as expected. 

MPI’s statistics showed that in 2006 and 2007, Vietnam had impressively high GDP growth rates, 8.23% in 2006 and 8.4% in 2007. Meanwhile, the GDP growth is believed to have slowed down in 2008, with the forecasted growth rate being only 6.5-7%. 

With a low economic growth rate in 2008, it is expected that the GDP growth rate of the past three years, 2006-2008, would be 7.8% per annum, while the planned figures are 7.5-8% per annum for the whole 2006-2010 period. 

Industrial production, especially construction, is witnessing sharp decreases in 2008. The industrial production value in 2008 is expected to increase by only 16.2% over the previous year, while the added value by 9.4-9.6%. Most noteworthy is the added value in the construction sector decreases in 2008, therefore leading to the general added value increase of industries and construction in 2008 being estimated at 7.3-7.5%, the lowest level in the last 17 years. 

2009: High inflation remains a focus 

MPI believes that in 2009 Vietnam will continue to deal with the negative impact of the US financial crisis. The national economy will also still have to face the negative impact of high inflation in 2008. Risky banking and finance operations, as well as difficult businesses due to high inflation and high interest rates will have a bad influence on efforts to maintain high economic growth rates for 2009 and the following years in the 2006-2010 plan. 

Experts believe that Vietnam will enter a period of recovery in 2009, and part of 2010. The most expected scenario is that the national economy will be stabilized in 2009 and regain the growth rate impetus in 2010. The GDP growth rate is expected to be 6.5% in 2009 before reaching 7.4-8% in 2010. 

In the development strategy for 2009-2010 socio-economic development, high inflation remains the biggest concern. Therefore, economists have suggested that Vietnam should still prioritize fighting against inflation to push the inflation rate down to a one-digit level by 2010. The expected GDP growth rate for 2009-2010 is over 7%.