Vietnam is unlikely to meet its targeted gross domestic product (GDP) growth rate of 7 per cent in 2008 due to a slow down in industrial production, local economists said Wednesday.
"I don't believe the government can achieve GDP growth of 7 per cent this year," said economist Tran Duc Nguyen, a former adviser to Vietnam's Prime Minister. "To reach 7 per cent growth for the year, the GDP growth for the last quarter would have to be 8 per cent. How can the government do it in this difficult context?"
At the close of the monthly cabinet meeting on Tuesday, Prime Minister Nguyen Tan Dung said that due to the global financial crisis, natural disasters and disease outbreaks, Vietnam's economy only grew 6.5 per cent in the first nine months of this year.
The Ministry of Industry and Trade said Monday that in the first nine months of this year, industrial production reached 493 billion dong (30 billion dollars), up 16 per cent over the same period last year.
But production will slow in the fourth quarter because of high prices for raw materials. Enterprises are also likely to meet difficulties in mobilizing capital.
The Vietnamese government initially targeted growth of between 8.5 and 9 percent for 2008, but cut the target to 7 per cent in April due to macroeconomic difficulties.
To control inflation and reduce a widening trade deficit, the government cut public spending and tightened its monetary policy. But at the end of September prices were still up 28 per cent from a year ago.
In mid-September, the Asian Development Bank's Vietnam country director Ayumi Konishi warned that continuing to set high growth targets endangered the fight against inflation, and that there was a "trade-off" between growth in 2009 and stable growth in subsequent years.
Economic experts have warned the government to focus on the quality of economic growth rather than the simple GDP growth figure.
"The GDP growth rate does not reflect the true nature of Vietnam's economy, because I don't trust the figures released in Vietnam," said Nguyen.
"Vietnam may not achieve GDP growth of 7 per cent this year, but that is not important," said Nguyen Quang A, director of Vietnam's Institute of Development Studies. "The most important criteria the government should focus on to do are stabilizing the macro economy, and maintaining sustainable development."
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