Vietnam's economy to grow above target this year
Vietnam's economy is expected to grow faster than its 5.8 percent target this year, accelerating from last year thanks to steady growth in exports, the government said on Tuesday. Growth this year could be more than 5.9 percent, while inflation could stay below 3 percent, Prime Minister Nguyen Tan Dung told the annual Vietnam Business Forum, revising his estimate from "above 5.8 percent" mentioned earlier in a government statement.
Copyright Reuters, 2014
Stable growth is crucial to the export-driven economy as the government is in final talks on multiple trade deals and has been pushing for reforms to erase bad debt and remove hurdles that have been curbing expansion. "Vietnam has grown to achieve quite comprehensive results in various areas, including in the economy, society and politics, but the achievements are yet to match with potential and have not reached our own requirements," Dung said.
Beijing's decision to move an oil rig into waters claimed by Hanoi in May had hurt the country's economic performance, he said. Earlier, economists said the conflict could erode the country's growth by 1 percent due to strained political and trade ties with China.
Vietnam's economy grew 5.42 percent in 2013, quickening from 5.25 percent in 2012. The government has targeted growth of 6.2 percent in 2015. A free trade agreement with the European Union, with which Vietnam shared 24.2 billion euro ($30.16 billion) in trade last year, may be signed in early 2015, Dung said. He said a trade deal with South Korea, Vietnam's top foreign investor, will be signed in coming days, and that Vietnam will also aim to sign a trade agreement with Russia, Belarus and Kazakhstan in early 2015.
Vietnam also has been in talks with 11 other fellow countries in the US-led Trans-Pacific Partnership that will form a huge free-trade bloc from Chile to Japan and is expected to elevate the competitiveness of the Southeast Asian country over China. Vietnam's government has projected exports in 2015 to rise 10 percent, near this year's growth projected at 12 percent. Economic growth is also being driven by bank credit, and banks have been stepping up clearing bad debts in order to bring toxic loans to 3.7-4.2 percent of the total loans by the end of 2014, from 17 percent in September 2012.
Loans by banks in Vietnam are expected to rise 13 percent this year, in line with an annual target of between 12-14 percent, the statement quoted central bank governor Nguyen Van Binh as saying at a cabinet meeting on Monday. "Vietnam has seriously acknowledged that there are many limits, we have to do more and more aggressively and effectively to grow fast and stable," Dung said.