HANOI — Vietnam's economy expanded at a slower 5.4 percent year-on-year in the first quarter, the government said Tuesday, while reiterating that taming inflation and achieving stability were its priorities.
The figure, released by the General Statistics Office (GSO), compared with 5.8 percent in the first three months of 2010, and annual growth of 6.8 percent last year.
Stabilising the economy, which is facing a complicated mix of challenges including a struggling currency and a trade deficit, has become the government's main focus, overtaking its quest for growth.
"We give ourselves the task of controlling inflation by all means, of stabilising the macro-economy and of assuring social security," the chief of the ruling Communist Party, Nguyen Phu Trong, said in a speech closing the National Assembly legislative session on Tuesday.
The government started taking action in February after months of concern from investors and analysts. It announced Vietnam's largest currency devaluation in years -- a 9.3 percent adjustment partly to address the import-export gap.
Officials then proclaimed fighting inflation to be their number-one priority, raised key interest rates to control rising prices, and set a series of targets to help stabilise the economy.
Among its goals, the government wants commercial banks to keep growth in credit, or loans, to below 20 percent this year. It also said public investment should be reduced.
Official estimates released last week show the trade deficit eased slightly to $3.03 billion in the first three months, while inflation was estimated to hit a two-year high of 13.9 percent year-on-year for March.
"I consider that the issues of the budget and trade deficits are urgent," a United Nations independent expert, Cephas Lumina, told reporters on Tuesday after a fact-finding mission to Hanoi.
The deficits have a close relationship with the country's debt burden which, if it continues to rise, can lead to "very, very difficult choices" between servicing the debt and funding social programmes, said Lumina, who is assessing the impact of Vietnam's foreign debt on human rights.
The communist-dominated National Assembly on Tuesday approved a resolution on economic and social policy which says the government should reduce the budget deficit to below five percent of gross domestic product this year.
It said high inflation had brought "a serious attack on the life of the population" and asked the government to assure social welfare.
Economists say much will depend on how the government implements its stabilisation package, and whether those efforts are sustained.
But international capital markets see Vietnam's moves as "a good start" because the government's cost of borrowing has dropped in recent weeks, bringing it back in line with the emerging-market average, the World Bank said.
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