Vietnam to post record GDP growth, but prices surging

Vietnam's economy is estimated to grow 8.4 percent this year, but inflation is expected to rise even faster, with prices shooting up 12.6 percent in the same period, state media quoted the government as saying yesterday.

The economic growth estimate sets a new record for the nation, Vietnamese Planning and Investment Minister Vo Hong Phuc told a Cabinet meeting on Sunday, according to the Sai Gon Giai Phong (Liberated Saigon) newspaper.

Export revenues -- mainly from oil, textiles and footwear, electronics, seafood, rice and coffee -- reached US$48.3 billion, but the trade deficit hit a new peak of US$12.4 billion, doubling last year's gap, it said.

The newspaper report said the US had now replaced the EU as Vietnam's top export market, accounting for 22 and 19 percent of its export revenues respectively.

GDP for this year is estimated to rise 8.44 percent, representing per capita GDP of US$833 for the year, the minister said, although he warned that the gap between the rich and poor was growing.

Foreign investment pledges in Vietnam have surged by nearly 70 percent so far this year thanks to the country's admission to the WTO, said Nguyen Viet Cuong, an official with the Ministry of Planning and Investment.

As of Dec. 22, foreign investors have agreed to invest US$20.25 billion, up 68.7 percent from the same period last year, the official said.

Last year, Vietnam attracted US$12 billion in foreign direct investment, a record since the country began accepting foreign investment in 1998.

"This year we had expected to attract only US$13.5 billion, but this is beyond our expectation," Nguyen said.

Since the beginning of the year, 1,406 new projects have been licensed worth US$17.6 billion. Investment in 361 existing projects has increased by US$2.65 billion.

Major deals include Trustee Suisse's project to invest in a tourism complex in Phu Quoc, in the southern Kien Giang Province, and the Vung Ro oil refinery being built by Britain's Technostar Management Ltd and the Russian Tettoi Oil and Gas Co.

"The admission to the WTO has definitely made Vietnam more attractive to foreign investors," said Le Dang Doanh, an economist.

In exchange for joining the WTO, Vietnam was required to slash tariffs and open previously closed sectors of its economy to foreign investors.

Amid the rapid economic growth, strong capital inflows and higher world oil prices, the consumer price index shot up to a decade-high of 12.6 percent, hurting the poor especially through higher food and fuel prices.

The cost of goods and services is set to spiral up another 1.8 percent next month ahead of the traditional Tet Lunar New Year celebrations in February, the country's main holiday, said Trade and Industry Minister Vu Huy Hoang.

In tourism, Vietnam received more than 4 million foreign visitors, up 16.4 percent year-on-year, the report said.