VNBusinessNews – A top financial expert has predicted that Vietnam’s economy would grow at 5% during 2009, significantly less than the 6.5% previously predicted by the Government.

Cheung Tai Hui, Standard Charter’s regional head of Southeast Asian economic research gave presentation in Hanoi on Feb. 17 regarding the prospects of the Asian economy, in which he forecast that Vietnam’s exports, as well as those of the whole of Asia, are falling sharply as a result of falling global demand since September 2008.

Foreign direct investment (FDI) and remittance from Vietnamese overseas are following a similar trend due to the recessions affecting developed economies and the fact that foreign businesses are being more prudent with their investment decisions and reviewing their business expansion strategies, Hui added.

However, he added, there is good news for Vietnam in the form of lower inflation rates and a decrease in the country’s trade deficit.

“Inflation is not going to be an issue. What you’ll find is that inflation will come to a single digit by the middle of this year. The good news here is we will see a very strong reduction in trade deficit, which was obviously a concern in 2008. I think it will be less of a concern in 2009.”

Regarding Vietnam’s monetary policy, Hui described the state bank’s rate cuts, from 14 to 7 percent, as “extremely aggressive”, and anticipated that the rates could be reduced even further in order to boost growth.

The fiscal stimulus package announced by the Government was a “positive start” and the recent income tax measures will be helpful in providing financial stability to the general public, he said.

The Standard Chartered representative also expected to see more contractions in numerous Asian economies during the first half of 2009, with the affected countries and territories including Singapore, Hongkong, Malaysia and Taiwan.

“And then we can expect to see some stabilisation, not recovery, during the second half of this year,” he predicted.

However, he added that Asia’s long-term prospects remain bright and the region will remain an attractive destination for global investors.