HANOI (AFP) — Vietnam’s lawmakers should lower the country’s economic growth target to around five percent in the face of an economic slowdown, a senior official said Wednesday.
The government asked the National Assembly to agree to reduce this year’s target from the previous goal of 6.5 percent, Deputy Prime Minister Nguyen Sinh Hung said at the opening of the legislature.
A lower target is required “to create momentum for better and more sustainable development in the following years,” he said, urging legislators to make the economy’s health their top priority.
The communist country’s economy expanded by 6.18 percent last year, its lowest level in almost a decade, and Hanoi said first-quarter growth was 3.1 percent, the worst on record.
But Vietnam was one of the few countries with growth in the first quarter of the year while the world’s major economies battled recession.
Hung said the global financial and economic crisis is difficult to forecast and continues to have a negative impact on Vietnam.
“Our difficulties remain numerous”, he said, although “there have been signs that we have got out of the most difficult period”.
The global downturn has hurt Vietnam’s exports, tourist arrivals, and private sector investment, Hung said.
The World Bank has estimated 5.5 percent growth for Vietnam this year and the International Monetary Fund (IMF) predicts 3.5 percent.
“It’s still going to be a tough global environment that Vietnam faces,” the IMF’s country representative, Benedict Bingham, told AFP.
Hung said that because of the downturn, state revenues have fallen while spending demands have risen, particularly for demand stimulation and social security expenditures.
The National Assembly will be asked to approve a maximum eight percent budget over-spending in 2009 to allow for the needed expenditures, Hung said.
In December the government announced a stimulus plan worth about one billion dollars.
During its 28-day sitting — almost all of which is behind closed doors — the assembly is expected to revise tax law as part of its effort to stimulate demand, officials said previously.