Vietnam’s economic growth eased slightly to 5.6 percent year-on-year in the first half of this year, data showed yesterday, but analysts say Hanoi still faces a challenge to temper growth, while curbing inflation.
The January-to-June figure compares with official estimates of 6.2 percent growth for the same period last year, according to the Vietnamese General Statistics Office.
However, it said the economy likely expanded 5.7 percent in the April-quarter, from 5.4 percent in the first three months.
Data shows the economy grew 7.3 percent in the final quarter of last year and 6.8 percent for the full year.
Long focused on growth, the government this year shifted toward stabilizing an economy facing a complicated mix of challenges, including a struggling currency and trade deficit, as well as increasingly high prices.
Figures released previously by the statistics office estimated that inflation would hit almost 21 percent this month, but analysts expect the figure to fall over the year.
“The Vietnamese economy obtained during the [first] six months of the year certain positive results,” the office said in its semi-annual report.
“It maintained reasonable growth. However, the economy of our country still faces difficulties and challenges,” it said.
Pledging that fighting inflation is its top priority, the government earlier this year raised key interest rates, vowed to cut state spending by 10 percent and ordered that growth in credit, or loans, stay below 20 percent.
Among other measures, it is also trying to control the gold trade and reduce the prevalence of US dollars in the economy.
DBS Group Research in Singapore said Vietnam needed to maintain “the delicate balance” between growth aspirations and economic stability.
“The economy appears to be on its path towards economic stability for now, albeit a bumpy one,” it said in a report on Tuesday.
However, DBS cautioned that if inflation escalated again, the local dong currency would come under renewed pressure.
“Hence, controlling inflation remains crucial in achieving long-term economic stability in Vietnam,” it said.
Many Vietnamese hold US dollars and gold — rather than their own currency — as a safe haven against economic uncertainty and inflation.
The government is aiming for full-year growth of 6 percent, which economist Nguyen Quang A called reasonable.
However, he said authorities faces a dilemma in trying to cut spending and investment without slowing growth.
“If the growth rate is too small you see ... the creation of new jobs will be problematic, but if inflation is high, there will be a problem of social turmoil,” he said.
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