Vietnam says economy grew 5.83 pct in 1st quarter

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Vietnam said Tuesday the economy grew an estimated 5.83 percent in the first quarter of 2010, but analysts warn sluggish exports and rising inflation could pose a threat to further expansion.

The figure for the first three months of the year compares with the 3.1 percent expansion a decade low in the same period last year.

It shows "that our economy continues to recover and obtain faster growth", the General Statistics Office said in a report.

The government is aiming for 6.5 percent gross domestic product (GDP) growth in 2010.

But Le Dang Doanh, a lecturer at the Economic College of Hanoi, said the growth figures far exceeded expectations and warned of difficulties ahead.

Vietnam's growth has been dependent on exports, but those have started to fall off, he said.

On Friday the GSO reported a 1.6 percent drop year-on-year in first-quarter exports, while imports rose 37.6 percent on rising domestic demand.

The GSO estimated the first-quarter trade deficit to hit 3.51 billion dollars.

"Exports are not an engine of growth any longer. It's a problem," said Vu Thanh Tu Anh, lecturer in economics and public policy at the Fulbright Economics Teaching Program in Ho Chi Minh City.

He added that as well as the trade deficit, inflation was also high.

Vietnam's consumer prices rose 8.51 percent in the first quarter, well above the government's target of less than seven percent for the year. The GSO said meeting that target would be "a heavy task".

In February the central bank devalued the dong for the second time in three months in the face of widespread concern over the trade deficit and inflation.

Further monetary policy tightening could affect growth, Anh said.

But he added he was not surprised by the first-quarter growth figure because the government continued to inject money into the economy, and the construction and utilities sectors were expanding.

The value of industrial production rose by almost 14 percent in the first quarter of this year to an estimated VND173 trillion (US$9 billion), GSO said.

But approved foreign investments were down in the period, at $2.1 billion, just 29 percent of the value approved in the first quarter last year, it said.

GSO data estimated actual foreign investment for the quarter was $2.5 billion, a 13.6 percent year-on-year gain.

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