Vietnam's planning ministry said that economic growth may slump to as low as 5.2 percent in 2012, which would be the slowest pace in more than a decade.
The economy has been buffeted this year by a credit crunch after the central bank pushed up interest rates last year to fight the fastest inflation in Asia, and with some Vietnamese banks' ability to lend constrained by a lack of capital amid concern about the health of the financial system.
The economy grew 4 percent in the first quarter, the slowest since 2009. The pace of expansion for the full year may be in a range of 5.2 to 5.5 percent, with second-quarter growth likely to reach about 4.5 percent, Deputy Minister of Planning & Investment Cao Viet Sinh, said in an interview Monday at a conference in the central Vietnamese town of Dong Ha.
"Looking at slowing industrial indicators and the difficulties that businesses are facing, we can see that it will be very difficult in the second half," said Sinh. "But the government still wants to stick with the 6 percent target for now and wait to see what growth in the third quarter will be, before making any changes in the target."
The pace of growth in the second half of the year may reach about 6 percent, as the government plans measures including increased state spending to boost consumption, Sinh said.
"We want to see the impact of the measures to help businesses, and we will also want to see the consumption and industrial indicators in the third quarter," Sinh said.
The last time Vietnam's economy grew less than 5.2 percent was in 1999, when gross domestic product expanded by 4.8 percent, according to figures from the General Statistics Office in Hanoi.
"Vietnam has entered a phase of sluggish growth," the World Bank said, in a report released Monday at the conference. The "growth rate has been trending downward for the last five-six years, largely on account of the slow pace of structural reforms," the lender said, citing inefficiencies in state-owned companies, banks, and public investments.
Vietnam's central bank should prioritize containing inflation and be cautious about lowering interest rates further, the International Monetary Fund said Monday.