Vietnam’s Economy Grows by 3.1 Percent

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Mar. 27 – The Southeast Asian country's economy grew by 3.1 percent during the first quarter of the year compared the same period last year as companies delay or cut investment plans and manufacturing.

The figure is the weakest on record since 1999 for which quarterly figures are available, reports Bui Ba Cuong, director of the office’s department of national accounts.

During the first quarted last year, the economy grew by 7.5 percent.“In this situation, 3 percent growth is a positive figure,” Nguyen Thi Mai Thanh, general director of Refrigeration Electrical Engineering Joint-Stock Co. told Bloomberg. “My business is not as bad as we had expected. We can live with this level of growth.”

FDI into the country dropped by 32 percent during the first quarter to VND19.3 trillion and pledged FDI investment fell by 40 percent.

Nevertheless, Vietnam is faring better compared to its neigbours; Thailand forecasts 3 percent growth for 2009. According to Prakriti Sofat, a Singapore-based economist at HSBC Holdings Plc., Vietnam's government stimulus spending, lower interest rates, weak currency and regional trade recovery in the second half could make easily lead to a GDP growth of more than 6 percent by the end of the year.

The effects of lower interest rates and taxes for local companies is expected to trickle down to the economy by the middle of this year. The government is also focusing spending on infrastructure projects, like power, telecommunications and transportation, to increase industrial growth.