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Vietnam's economy slows in 1st quarter; government to cut 2008 target

Vietnam's economy slows in 1st quarter; government to cut 2008 target

Vietnam's economic growth slowed in the first quarter and the government indicated Wednesday it will lower its annual growth forecast as anti-inflation measures and a global slowdown take their toll.
Gross domestic product grew an estimated 7.4 percent in the January-March quarter from the same period a year ago, down from the 8.5 percent growth rate in 2007. Analysts estimate that growth in the fourth quarter was 9.3 percent.
First quarter growth was hurt by higher oil prices, slower world growth, and depreciation of the U.S. dollar, according to the government statement. Natural disasters and animal diseases also hurt the economy.
Prime Minister Nguyen Tan Dung said in a statement Wednesday that Vietnam will have to adjust its growth target of 8.5-9 percent for 2008 given "unfavorable economic conditions" without elaborating.
Within Asia, Vietnam's growth has been second only to China in the past few years, with economic liberalization drawing a flood of foreign investment.
But rising inflation, which reached 16.4 percent in the first quarter, has threatened to undermine the economic success story, prompting a slew of credit and liquidity tightening measures that have sent the Ho Chi Minh City stock market into a tailspin.
Vietnam also faces headwinds from weaker world growth, which is expected to widen the trade deficit and slow foreign investment this year.
The government, which releases economic data based on estimates before the reporting period ends, had targeted 8.5 percent growth in the first quarter.
"The government's target for full year growth looks very ambitious given expectations of a slowdown or recession in the U.S.," Standard Chartered economist Tan Hui was quoted by Dow Jones Newswires as saying. "I would be very surprised if it emerged unscathed from the slowdown coming out of the U.S."
Standard Chartered forecasts Vietnam's GDP to expand about 7.5 percent this year.
Prime Minister Dung said that a weakening global economy will have a direct negative impact on Vietnam as the total value of trade is 1.7 times gross domestic product and some 35 percent of the country's capital comes from foreign sources.


Updated : 2021-10-18 16:23 GMT+08:00