H1 growth positive despite tough times: government report

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Vietnam has faced more challenging economic problems than expected, but it managed to achieve positive results in the first half of the year.

A government report submitted Thursday to the National Assembly by Deputy Prime Minister Nguyen Sinh Hung said even though a first-half economic growth of 5.57 percent was low compared to the same period last year, it was a sucess considering the challenges overcome.

According to the report, exports reached US$42.33 billion in the first six months, up 30.3 percent from a year ago. In addition, the currency market has stabilized, allowing the central bank to added nearly $4 billion this year to its foreign reserves.

While the government took measures to control fiscal deficits, it still paid attention to social stability, creating 724,360 jobs and sending 45,860 workers abroad.

But the report also pointed out serious problems that the economy is facing. It said inflation has started to ease but is still at a high level. Consumer prices rose 13.29 percent in June compared to the end of 2010, higher than the 7 percent target set by the National Assembly.

"The reasons for high inflation include external factors such as increasing international food and oil prices and high inflation in many countries around the world; and internal factors which resulted from the use of a stimulus package from 2008 to 2010 as well as increases in electricity and petrol prices and salary hikes," it said.

The report also said high interest rates were hurting production and bad debts in the banking system were on the rise. It said the country's first half trade deficit was around $6.65 billion in the first half, most of which caused by shortfalls in trading with regional countries.

Hung said the government will continue to cut the trade deficit by limiting the import of luxuy and unnecessary goods and monitoring the import of material and equipment by state-owned enterprises. 

He said a tight and cautious monetary policy will be sustained for the remaining months of the year as the government aims to keep credit growth under 20 percent.

Annual inflation has been forecast at between 15 percent to 17 percent this year, then easing to single-digit levels next year.

The National Assembly's Committee for Economic Affairs, however, said it will be very difficult" to slow inflation to 17 percent by the end of this year.

The committee said this year's soaring inflation has caused many difficulties for the people, especially the three million poor families and 1.6 million others on the verge of poverty.

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