The Economist Intelligence Unit, an offshoot of the UK’s Economist magazine, has lifted its forecast of Vietnam’s GDP growth rate in 2010 to 6.4 percent, up from 6.2 percent in its previous forecast.

The recovery in the global economy promises brighter prospects for Vietnam’s export sector and the recent rise in imports suggests that consumer and investor demands are growing. 

However, although economic growth has risen from 5.4 percent in 2009, it will not return to the heady annual rates of more than 8 percent that were recorded before the global recession.

According to the EIU, on the supply side, growth in the industrial sector will accelerate in the 2010-11 period, mainly driven by the foreign-invested sector. 

In the first six months of 2010 the industrial value grew by 13.6 percent year on year, with the foreign-invested sector posting a growth of 17 percent. Nevertheless, the growth in demand for Vietnam's manufactured exports will remain sluggish over the next two years compared to the period before the global recession. 

The EIU underlined that the growth of investment in manufacturing will remain relatively low because of last year’s crisis although foreign investors remain positive about Vietnam’s long-term prospects.

After receiving a boost in 2009 from low interest rates and a reduction in the cost of input materials, Vietnam’s construction sector has grown rapidly, at 11.5 percent, in the second quarter of 2010. 

The construction industry will be helped in 2010-11 by the State investing in infrastructure projects, as well as the expansion of office space. Growth in the services sector, which was the engine that drove economic expansion in 2009, will also increase, with retail and financial services making major contributions.

The EIU also expects Vietnam’s consumer price index to rise from 7 percent in 2009 to an annual average of 9.2 percent in the 2010-2011 period. However it warned that a rising inflation rate and relatively high unemployment could restrict the growth of future consumer spending.

The World Bank recently forecast that Vietnam’s GDP could expand by 7 percent in 2010, overtaking the government's target of 6.5 percent.

Source: VNA