Vietnam's economy on right track, but set to miss growth target: ministry

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Construction workers build a bridge in Hanoi

Vietnam will miss this year's economic growth target of 6-6.5 percent as the economy, though improving, is not completely stable, the Ministry of Planning and Investment says.

The expansion is now forecast at 5.2 percent, in line with recent projections from the World Bank and the Asian Development Bank.

Despite the lower forecast, the ministry said in its latest report that the economy is moving in the right direction, with interest rates falling, foreign reserves rising and the local currency remaining stable.

The report, which will be sent to legislators at a National Assembly gathering later this month, said difficulties in doing business have eased and inventory levels are falling.

However, the economy is not strong yet, with the restructuring process moving slowly. The report says growth could pick up to 5.5 percent in 2013 while inflation will be around 7-8 percent.

Vietnam's economy expanded 4.73 percent in the first nine months of this year from a year ago, official data showed.

The World Bank on Monday cut its growth forecast for Vietnam to 5.2 percent from 5.7 percent, after the Asian Development Bank lowered its  projection to 5.1 percent this year.

Vietnam's current account shifted from high deficits during 2007-2010 to a large surplus of above US$6 billion for the first nine month of 2012 and is forecast to have a full-year surplus of $7.1 billion, Le Minh Hung, deputy governor of the State Bank of Vietnam, said in a statement prepared for a meeting of the World Bank and the International Monetary Fund in Tokyo Friday.

He said market confidence "is being strengthened rigorously" as the government implements the financial and banking sector restructuring plan.

"The government of Vietnam assures that in the coming year, we will continue the pursuit of macroeconomic stabilization and inflation control, ensure appropriate economic growth and continue to accelerate the overall economic restructuring process that focuses on three main pillars, namely, public investment, state-owned enterprises and the credit institution system," he said, calling for continued support from international donors.

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