Vietnam economic growth slows in 2011

Dec 29, 2011, 7:26 GMT

Hanoi - Vietnam's economic growth slowed this year to 5.9 per cent as the central bank raised interest rates to try to curb inflation, the government said Thursday.

The higher rates reduced the number of loans and investments, putting the brakes on Vietnam's economic expansion, which was 6.8 per cent last year, the General Statistics Office said.

The slowdown in gross domestic product was also caused by government efforts to trim public investment and its budget deficit.

The government had wanted to keep inflation this year to 7 per cent, but it hit 18.6 per cent, the highest inflation level in Asia, thanks to the rising prices for food, housing and transport. This year was the second the government had failed to contain inflation to a single-digit figure after the 2010 rate was 11.8 per cent.

The country's trade deficit, however, fell sharply to 9.5 billion dollars in 2011, the lowest level in a decade. It narrowed as the government tightened monetary policy, lowered public spending and placed limits on imports of luxury goods.

Vietnam ran a trade deficit last year of 12.4 billion dollars, compared with 12.8 billion dollars in 2009 and a record deficit of 17.5 billion dollars in 2008.

Vietnam aims at keeping its inflation rate below 9 per cent while maintaining growth of 6 per cent next year.