Vietnamese economic growth hits 3 year low

Growth in Vietnam's gross domestic product (GDP) fell to 4 per cent year-on-year in the first quarter, the lowest in three years, as companies struggle to acquire credit, dpa quoted authorities as saying Thursday. GDP expanded 5.57 per cent in the same period last year and 5.83 per cent in 2010, the Ministry of Planning and Investment said. The central bank announced this month that it was cutting three of its four main interest rates by 1 percentage point in a bid to improve credit conditions for companies and boost production. But the move has rekindled concerns of increased inflation, which is one of the factors making it difficult for companies to borrow in the first place. Inflation in the first quarter was 15.95 per cent year-on-year, compared with 12.79 a year previously, according to the General Statistics Office. The government has set a target of single-digit inflation and GDP growth of 6 to 6.5 per cent for the year. Times are tough for businesses, which are facing high input prices and high interest rates, the Ministry of Planning and Investment said. According to the Vietnam Chamber of Commerce and Industry, of the 77,500 firms set up in 2011, 7,600 closed the same year, which saw a total of 79,000 companies dissolved. According to the World Economic Forum's Global Competitiveness Report 2012, Vietnam ranked 65th of 142 countries, losing six grades compared with 2010.