U.S. bank Goldman Sachs forecast Vietnam’s economy to grow by 5.1 percent in 2009 and 8.2 percent in 2010 in its report released on Dec 3.

The report says Vietnam’s economic growth recovery since the second quarter of this year came thanks to rising domestic consumption.

Thanks to the government’s stimulus package and loosened monetary policies, Vietnam’s economy has overcome the negative effects of the global financial crisis. In the third quarter of 2009, Vietnam’s GDP grew by 5.2 percent year-on-year, nearly equal to average Asian GDP of 5.3 percent, excluding Japan, the report says.

The report says Vietnam has done well thanks to household financial strengths and inflationary controls.

In addition, the report pointed out that investment also surged again based on the government’s stimulus package and lending subsidy.

Concerning the fiscal policies, although a part of Vietnam’s expanded fiscal policies will be continued in 2010, the budgetary deficit in comparison with 2010 GDP will come in at around 9 percent of GDP.

“We think that Vietnam’s loosened monetary policy is going to end because State Bank of Vietnam (SBV) has applied tightening policies such as hiking interest rates or reducing liquidity to curb inflation for 2010″, the report predicted.

However, Goldman Sachs did point to some periodic challenges Vietnam has to face, including rising inflation and trade deficit.

2010 is another important year when Vietnamese lawmakers will have to meet difficulties in easing inflation pressure while avoiding disadvantageous impacts to the economic growth, the report says.

Vietnews Online, SGGP, Vietnam Economic Times