Vietnam's economy grew at 3.9 percent in the first half of the year, the lowest level in a decade, but is on course to meet the government's full-year target, officials said Wednesday.
The General Statistics Office (GSO) warned, though, that high inflation could return to the communist nation.
It said second-quarter growth was 4.5 percent and estimated the economy would expand in the next six months at 5.9 percent.
"This 3.9 percent is the lowest level on record since 1999", when first-half growth was 4.1 percent, said Bui Ba Cuong, head of the national accounts department at the GSO.
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| Vietnamese residents eat breakfast at a roadside coffee shop outside a development project in the central coastal city of Da Nang on 24 June 2009. Da Nang has become one of Vietnam's most fast developing cities since the country switched to the market economy. (Getty) |
But the GSO, in its report, said that although the economy faced many challenges in the first six months of 2009, it "has grown faster and has shown signs of recovery."
First-half growth last year was 6.5 percent.
Vietnamese legislators agreed last month to lower the country's economic growth target this year to around five percent from 6.5 percent in the face of an economic slowdown that they said had hit production, trade, investment, job creation and revenues.
The GSO said that "if we try to maintain the current pace, the year-end growth may reach around five percent".
Vietnam's economy expanded by 6.18 percent last year, its lowest level in almost a decade, and first-quarter growth was 3.1 percent, the lowest on record.
But Vietnam was one of the few countries with positive growth in the first quarter of 2009 while the world's major economies battled recession.
Inflation in Vietnam hit a record 28.3 percent last August before rapid disinflation occurred in the second half of the year.
Government data released earlier showed consumer prices rose 10.27 percent in the first six months of this year, driven mainly by sharply higher food costs.
"Prices have increased slower but remain high and inflation may come back," the GSO said.
Martin Rama, an economist with the World Bank in Vietnam, also recently said that the time when inflation was less of a concern to the country "may be coming to an end."
Legislators said they hoped inflation could be maintained below 10 percent this year.
"I would expect the growth to continue picking up," one economist said, citing the continued effects of government stimulus measures, as well as relatively weaker growth in the second half of last year which will be used as the comparative period.
Legislators have approved a maximum budget over-spending of seven percent of gross domestic product to allow for needed expenditure, including the stimulus measures.
The economist, who declined to be named, said that despite an expected pickup in growth, he was not sure whether the government's five percent target was attainable.
The World Bank has estimated 5.5 percent expansion for Vietnam this year, the Asian Development Bank 4.5 percent, and the International Monetary Fund predicts 3.5 percent.
The GSO said foreign investment commitments fell in the first half of the year to 8.9 billion dollars, a drop of 77.4 percent compared with the same period a year earlier. Actual foreign investment was about four billion dollars, a fall of 18.4 percent year-on-year, GSO said.
GSO data released last week showed Vietnam's trade deficit in the first half dropped to an estimated 2.1 billion dollars, with imports falling more than exports.
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