By Han Qiao

    HANOI, Dec. 16 (Xinhua) -- Vietnam's economic train, after roaring at fast speed for one decade, slowed down in 2008, amid domestic economic turbulence and global financial turmoil.

    Vietnamese economy impressed the world by an average growth rate of 7.5 percent in the past decade. The stable political environment and fast economic reform process have made it a favorable destination for foreign investment. It joined the World Trade Organization last year to further integrate itself to the outside world.

    However, the brake of the economic engine was hit in the first quarter this year by a domestic economic turbulence with high inflation, high deficit, falling stock index and currency depreciation.

    Inflation growth in March went up as high as 19.39 percent year-on-year. The trade deficit stood at 7.4 billion U.S. dollars in the first quarter, equaling 56.5 percent of export value. Meanwhile, the stock market experienced steep fall, so is the property price.

    The outbreak of these problems, in eyes of Vietnamese and international experts, was not a sudden matter, as over the past years, the investment in the country has grown too fast, credit supply swollen and inflation climbed, all signs of overheating. Vietnamese economy, after years of fast expansion, entered an "adjustable period", they believed.

    The Vietnamese government launched a number of measures to stabilize the economy in the second quarter, including lowering the economic target, reducing public investment, raising interest rates three times to tighten credit, and promoting exports while strictly supervising imports.

    The measures proved to be effective as Vietnamese economy started to show signs of improvement in the third quarter. Inflation was reduced from the monthly average of 2.9 percent for the first six months to less than one percent for the third quarter. Trade deficit narrowed from the monthly average of 2.3 billion U.S. dollars in the first six months to the level of less than one billion dollars in the third quarter.

    However, the country did not have much time to take a breath before global economic turmoil spread and posed serious challenges to the country's export-driven industry in the fourth quarter.

    Statistics showed that major exporting items of Vietnam including rubber, rice and seafood have all seen price down and exporting volume shrinking in the fourth quarter. The current exporting price of Vietnamese rubber went down by 50 percent compared with a few months ago. Some rubber planters have to stop sales as the selling price is lower than the production cost.

    Vietnamese Prime Minister Nguyen Tan Dung said recently that the impact of the global financial crisis on Vietnam is expanding and has hit the export and tourism sectors hard.

    To stimulate economic growth and help domestic companies through the difficult period, Vietnamese government recently launched a six-billion-dollar stimulus package to drive investment and consumption. It also said a tightened, but flexible monetary policy would be implemented in 2009 to ensure the stabilization ofthe macro-economy and financial safety, while sustain the economic growth.

    The Prime Minister has asked all the government bodies to work hard to combat economic recession and support production.

    Looking ahead at next year, Vietnamese government made an economic target of 6.5 percent, the same as the estimated growth rate for this year. It believed the inflation would remain double-digit, foreign direct investment inflow would slow and there is difficulty to maintain international payment balance.

    World Bank leading economist in Vietnam Martine Rama believed the economic target set by the Vietnamese government is "reasonable". He believed Vietnamese economy will face slower growth next year, but there will not be a dramatic slow down.

    Asian Development Bank country director in Vietnam Ayumi Konishi held that the economic growth in Vietnam would be much slower next year, maybe at four to five percent. It is very difficult to make the forecast at this point, as the global economic crisis is still developing.