Second-half growth may top 7.5 percent, Capital Economics says

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Vietnam's second-half growth rate may exceed 7.5 percent, spurring the country to its fastest full-year pace of expansion since 2007, according to estimates by Capital Economics Ltd.

The economy may grow 6.6 percent in the second quarter, up from 5.8 percent the previous three months, and expand 7 percent in 2010, the UK research consultancy said in a note Tuesday. That would outpace the 6.5 percent government target.

"Growth in gross domestic product should pick up during the rest of 2010," Kevin Grice, an economist at London-based Capital Economics, said in the note. "The economic upswing will continue to gain momentum in the second half as global conditions remain supportive, for now, and domestic bank lending accelerates."

Credit expanded 8 percent in the first five months of the year, State Bank of Vietnam Governor Nguyen Van Giau has said. The global recovery from last year's recession has boosted Asian exports and lifted economic growth from Thailand to Malaysia.

Vietnam's economic growth accelerated in the subsequent three quarters after slowing to 3.1 percent in the first three months of 2009. Gross domestic product expanded 5.3 percent last year.

"Retail sales have improved after a strong end of 2009," Grice said. "Industrial output and import growth have also started to accelerate again."

Retail sales grew 27 percent in the first five months of 2010 compared with the same period in 2009, according to the General Statistics Office in Hanoi.

"The growth in the Vietnamese consumer market is truly remarkable," Andrew Puzder, chief executive of California-based CKE Restaurants Inc., said in a statement Tuesday. CKE's Carl's Jr. hamburger chain this week opened its first outlet in Ho Chi Minh City, the first of at least 25 branches planned over the next six years, the company said.

Imports rose 30 percent through May from a year earlier. Machinery, refined oil and steel account for about a third of overall Vietnamese imports, acting primarily as input materials for industries that attract the bulk of foreign investment in the country, according to DWS Vietnam Fund Ltd.

"Foreign direct investment is strengthening," Grice said. "Exports are rising faster as well."

Exports grew 13 percent in the first five months from a year earlier, and shipments climbed 14 percent in May from April, according to the General Statistics Office.

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