by Le Phuong
HANOI, Jan. 5 (Xinhua) -- Vietnam had worked hard for the whole of 2012 to solve the dilemma of how to control inflation while trying its best to achieve its growth target amid a continued slowdown in the global economy.
Just like other export-oriented countries in the region, Vietnam was hit hard by the sluggish global economy and the financial crisis that continued in Europe.
The fast but unsustainable growth for years in the country that depended mostly on high credit growth and large investments in non- production areas triggered serious inflation. However, to rein in credit growth would raise fears that Vietnam's economic growth could slow further.
How to manage inflation while working to preserve the growth momentum became a big problem for the Vietnamese government throughout the year 2012.
"In 2012, the Vietnamese government continued to attach priorities to curbing inflation and stabilizing the macro economy while retaining the development growth at an appropriate rate with a new model of growth, along with economic restructuring," Nguyen Dang Phat, chief of the Economics Department under the Vietnam News Agency, told Xinhua.
Phat said the government was able to curb inflation rate at 6. 81 percent in 2012, much lower than the previous year's 18.12 percent, with the gross domestic product (GDP) dropping from 5.89 percent to 5.03 percent.
In 2012, the Vietnamese government adopted measures to develop the national economy while implementing Resolution No. 11, which was issued in February 2011 with an aim to curb inflation, stabilize the macro economy and ensure social security.
According to Phat, domestic business had faced extreme difficulties in 2012 due to difficulties in getting loans from banks and high inventory.
Data from the Business Registration Bureau of the Vietnamese Ministry of Planning and Investment showed that in the first 11 months of the year, 48,473 businesses ceased operations.
However, a total of 62,794 new businesses were established, with a total registered capital of 403 trillion VND (19.3 billion U.S. dollars), a decrease of 10 percent in number and 8.4 percent in capital compared to the same period of the previous year.
Towards the year-end, the country's economy hit two major " bottle-necks," including a high product inventory, especially in the real estate sector, and banks' bad debts, said Phat.
According to the Vietnamese General Statistics Office, as of November 2012, the inventory index of the processing industry rose by 20.9 percent year-on-year. Out of 160 fish processing export companies, only 32 units retained their production and export volume while the remaining were in stagnant production.
About 61 percent of the sector's export turnover, worth 890 million U.S. dollars, was contributed by just 20 companies.
At the end of 2012, credit growth would reach 6 percent, lower than 20 percent in previous years. This proved that businesses were facing difficulties, which could have a negative impact on the national economy in 2013 and 2014.
Economists from the Ministry of Planning and Investment's National Center for Socio-Economic Information and Forecast predicted that under the best scenario in the global economy, Vietnam's growth rate in 2013 would likely reach 5.68 percent and inflation at 7.1 percent.
Under the worst global scenario, Vietnam's GDP would rise by 5 percent and inflation by 5.5 percent in 2013.
The Vietnamese government and National Assembly are aware of lots of difficulties ahead in 2013, amid the continuous global economic downturn.
Vu Duc Dam, minister-chairman of the Government's Office, told media recently that measures to implement goals for 2013 are available, and in the last month of 2012 the government has issued guidelines on how to achieve the goals for 2013, including a lower inflation rate and a higher development growth than those in 2012.
Le Xuan Ba, director of the Central Institute for Economic Management, said the government has set forth correct directions and goals, but it has been influenced by diverse opinions and worries that made it difficult for it to address the problems.
To achieve sustainable growth, the government has no choice but to confront the challenges ahead by adopting bold and innovative measures, Ba said.