Vietnam lowers growth target for next five years

Oct 20, 2011, 10:27 GMT

Hanoi - Prime Minister Nguyen Tan Dung on Thursday lowered Vietnam's economic growth target for the next five years from 7.5 per cent to 6.5 to 7 per cent annually as part of an effort to reform an economy that prioritizes high growth to one that emphasizes the quality of its growth.

'During the next five years, the most important task is to restructure the economy,' Dung told the National Assembly, which opened Thursday. 'The government will try to control public debt.'

His announcement was part of a shift in policy for the government, which until recently stressed economic growth by boosting public investment. As a result, gross domestic product (GDP) grew at an annual average of 7 per cent from 2005 to 2010.

Many foreign and local economists said the emphasis on public investment caused the government to run up massive debts and led to prices rising 16.6 per cent in the first nine months of this year.

Analysts said the country's economic problems have been exacerbated by funds channeled to inefficient state-owned enterprises. Many of them have reported heavy losses, including the shipbuilding conglomerate Vinashin, which has incurred debts of 4.6 billion dollars.

The country's public debt was estimated to grow to 55 per cent of GDP this year, up from 52.6 per cent last year and 47.5 per cent in 2009. The country's foreign debt increased to 32.5 billion dollars in 2010, up from 27.9 billion dollars in 2009, according to government figures.

Vietnam's GDP was 104 billion dollars in 2010. The target for 2015 is 180 billion dollars.