Vietnam’s economy grew at its fastest in three years in 2010, according to an official estimate released Wednesday, despite concerns over high inflation, a struggling currency and current account deficit.
Gross domestic product (GDP) expanded by roughly 6.8 percent compared with 5.3 percent the previous year, 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 the year, expanding in the fourth quarter by an annualized 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 stabilize the macroeconomy,” the GSO report said.
The figures beat the government’s target of 6.5 percent growth for 2010. It is aiming for 7 percent expansion in 2011.
Recovery in industry, construction and agriculture, coincided with stronger external demands to boost the country’s growth rate, the World Bank said in a report in December.
But Vietnam’s impressive growth has 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, the World Bank said.
“So Vietnam, despite being one of (the) most dynamic countries in the region, finds itself an exception to the broader emerging market trend of stronger currencies, robust capital inflows and rising foreign exchange reserves,” it said.
The country will follow a more flexible exchange-rate regime in 2011, 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 US$12.4 billion this year, as exports surged more than imports.
Vietnam’s donors warned that the country’s economic growth will be threatened unless the government can control rising inflation and currency weakness.
Observers have also questioned a growth strategy that has relied on low-cost labor and resource industries.
Pledges of foreign direct investment fell about 18 percent in 2010 from 2009, with Singapore leading the commitments for new spending, the GSO said. Disbursed foreign capital rose 10 percent to about $11 billion.