The nation's gross domestic product (GDP) is forecast to grow by 4.8percent during the second quarter of the year, lower than the previousquarter.
According to a recent report by the National Centre forSocio-Economic Information and Forecast (NCEIF), many economicchallenges highlighted during the first quarter would continue to hinderan economic recovery in the coming time.
Prospects for a globaleconomic recovery were still limited while the domestic economy wasstill grappling with difficulties relating to bad debts and a lack ofcapital for businesses along with falling purchasing power.
Industrial production was low and high inventories continued to pose aheadache, with the food sector seeing a growth rate of only 3.1 percentin comparison with 11.8 percent during the same period last year.
The stagnant real estate market also had a negative impact onproduction of raw materials, steel and cement, with the mining sectoralso seeing slow growth of 3.8 percent.
Export growth reliedlargely on foreign investment with the FDI sector running a tradesurplus of nearly 1.31 billion USD, a figure that helped improve thecountry's overall trade balance.
Statistics showed that the FDIsector's exports were valued at 19.2 billion USD, accounting for morethan 60 percent of the country's total export turnover and representing arise of 25.6 percent over the same period last year. The sector'simports accounted for 55 percent of total import turnover, at 16.1billion USD.
According to NCEIF, foreign direct investment inflow was decreasing.
Although the first quarter of this year saw inflow of FDI capitalaccount for 26.16 percent of total capital of all kinds into thecountry, a rise of 1.37 percent over the same period last year, itdecreased by 6.33 and 2.7 percent in comparison with the first quarterof 2010 and 2011, respectively.
The country's budget deficit wasat about 35.6 trillion VND in the first quarter due to low revenues.Statistics showed that as of January 15, total State revenue wasestimated at 16.7 percent of targeted revenue for the full year, arecord low since 2008.
Loan interest rates remained high (at anaverage of 14 percent) with low credit growth, and a high rate ofnon-performing debts (estimated at 6 percent), especially in the realestate sector.
These statistics reflected the economy's lowcapital absorbency, creating the paradox of an abundance of cash despiteenterprises' great need for capital, and playing a major role in thelow economic growth rate during the first quarter, according to theNCEIF.
The centre said in its report that while many Governmentpolicies had been issued in a timely manner, many were not practical orhad not been effectively implemented.
The implementation ofGovernment Resolution No 01/NQ-CP and Resolution 02/NQ-CP on tacklingproduction difficulties and resolving bad debts held by businessesremained slow, hindering economic recovery.
The centre called forimplementation of these policies to be sped up and their practicalityensured to stabilise the economy and recover production, adding thatinappropriate resolutions should be amended or eliminated to enhanceefficiency.
Problems related to bad debts and credit needed to betackled while measures to boost purchasing power had to be taken tohelp ensure capital sources for enterprises.
"Falling consumptionis one of the causes for the stagnant economy, creating difficultiesfor enterprises. Measures to accelerate demand, such as price cuts, jobcreation and salary increases, are necessary for the economy torecover," the report said.
The centre forecast a GDP growth rateof 4.8 percent for the second quarter of the year while the consumerprice index (CPI) would rise at a rate of 3.2 percent over December lastyear.-VNA