President of Vietnam Nguyen Minh Triet addresses the 64th United Nations General Assembly at the U.N. headquarters in New York, September 25, 2009

Vietnam has shifted its focus toward stoking economic growth after bringing inflation down to the lowest level in more than seven years, President Nguyen Minh Triet said.

“In 2008, our government focused on the pressure of high inflation,” Triet said in an interview Thursday during a visit to New York for the opening of the United Nations General Assembly. “This year we are focusing more on investment for growth.”

The government is trying to “prevent the recurrence of high inflation,” Triet said. Vietnam’s inflation slowed after the government reined in loan growth, and the price of commodities including oil and rice dropped globally.

The country’s “balanced” approach to economic development has allowed it to curb inflation, he said. “In the course of boosting economic growth, we keep a constant watch over inflation.”

Fiscal deficit

The fiscal deficit may widen to 10.3 percent of gross domestic product this year from 4.1 percent in 2008, according to the Asian Development Bank, while the government has increased its target for credit growth for the year to 30 percent from a previous figure of 25 percent.

Vietnam’s GDP grew 3.9 percent in the first half, up from a 3.1 percent first-quarter pace that was the slowest on record. In the second quarter alone, growth accelerated to 4.5 percent. The government is targeting growth for the full year of at least 5 percent.

“Due to structural problems in the economy, every time growth ramps up, inflation is right behind it,” said Jonathan Pincus, an economist with the Vietnam Program at the Harvard Kennedy School in Ho Chi Minh City.

Commitments by foreign investors to projects in Vietnam dropped 79 percent in the first nine months of the year to $12.5 billion, from the same period last year, Dau Tu newspaper reported Friday, citing unnamed officials at the Ministry of Planning and Investment.

The level of foreign investment into Vietnam this year “is a decrease, but if you put it in the context of the current crisis, it is a good achievement,” Triet said. “We have been able to win the confidence of foreign investors, including American investors.”

Source: Bloomberg