Vietnam 2012 growth at 13-year low
2012-12-25 12:11:19
Vietnam's economy grew at the weakest pace in 13 years during this year as the country's banking system remains hurt by high bad debts and slow lending.
According to figures released on Monday by the General Statistics Office, gross domestic product rose 5.03 percent this year, the weakest pace since 1999, and slower than the 5.89 percent expansion logged in 2011.
The growth figure was also lower than the government's forecast of 5.2 percent. Earlier this year, the government revised down the forecast from as high as 6.5 percent. In the fourth quarter, the economy expanded 5.44 percent annually, following 5.05 percent growth in the previous three months.
Economists expect the economy to face a difficult year in 2013. The government has forecast 5.5 percent growth for next year.
"Problems in the banking sector, which have caused to a sharp slowdown in credit growth, are the main reason for the poor performance," Capital Economics said this week. "The woes of the banking sector are likely to remain a drag on the economy in 2013."
The agriculture, forestry and fisheries sector grew 2.72 percent, adding 0.44 percentage points to 2012 growth. Output from the industrial and construction sector rose 4.52 percent, resulting in a 1.89 percentage points contribution to growth. Service sector expanded 6.42 percent, adding 2.70 points to overall growth.
Inflation was 9.21 percent this year and 6.81 percent during December. Prices edged up 0.27 percent from November.
In 2012, exports rose 18.3 percent and imports grew 7.1 percent, leading to a trade surplus of $284 million. The surplus was the first since 1993, the statistical office said. Economists attributed the surplus to the weakness in the domestic economy.
Moody's Investors Service downgraded Vietnam's sovereign ratings in September, citing an intensification of banking system vulnerabilities. The firm sees lower medium-term growth prospects for the economy due to weak capacity of banks to provide credit.
The rating agency believes that there is an elevated risk that the costs of recapitalizing the banking system will have to be borne, at least in part, by the government. Given the looming costs related to recapitalization of the banking system, the government may also be constrained in its ability to formulate an effective fiscal policy response to a more severe slowdown in global growth, Moody's observed.