HANOI, December 29, 2010 – Vietnam’s economy grew at its fastest pace in three years in 2010, according to an official estimate released Wednesday, despite concerns over high inflation, a struggling currency and other risks.
Gross domestic product (GDP) expanded by roughly 6.8 percent compared with the year before, when it rose 5.3 percent, the slowest rate in a decade, the General Statistics Office (GSO) said in a year-end report.
The economy grew 6.3 percent in 2008 and 8.5 percent in 2007.
GSO figures showed that growth accelerated throughout this year, expanding in the fourth quarter by an annualised 7.3 percent.
“These results confirm the effectiveness of measures and solutions taken firmly and vigorously by the government to prevent economic slowdown and to stabilise the macroeconomy,” the GSO report said.
The government’s target was 6.5 percent growth this year. It is aiming for seven percent expansion in 2011.
In a report this month the World Bank said communist Vietnam’s impressive growth had been accompanied by increased economic risks such as falling foreign exchange reserves, high inflation, a struggling currency, and a relatively high current account deficit, the broadest measure of external trade.
Inflation hit 11.8 percent in December on a year-on-year basis, according to a GSO estimate.
The dong has been devalued three times since late last year.
Next year the country will follow a more flexible exchange-rate regime while using monetary policy to curb inflation, the central bank said Wednesday.
Signalling a possible interest-rate hike and another currency devaluation, State Bank of Vietnam Governor Nguyen Van Giau said the exchange rate will be based on market conditions and interest rates, and should be used to help boost exports and reduce imports.
The GSO on Tuesday reported that Vietnam’s trade deficit stayed relatively steady at 12.4 billion dollars this year, as exports surged more than imports.
Vietnam’s donors warned this month that the country’s economic growth will be threatened unless the government can control rising inflation and currency weakness.
Ratings agencies Moody’s and Standard & Poor’s recently downgraded their ratings for Vietnam because of worries about the economy, the banking sector and the problems of nearly-bankrupt shipbuilder Vinashin, a state-owned firm.