Vietnam’s economy, struggling with double-digit inflation and a widening trade deficit, grew an estimated 6.23% this year, well below target and slowing from an expansion of 8.5% in 2007, the government said on Wednesday.

Prime Minister Nguyen Tan Dung said growth this year did not reach the National Assembly’s target of 6.7% but was still “relatively high given the situation with many difficulties”, the government said in a statement.

It did not provide an inflation rate for 2008 but last week Planning and Investment Minister Vo Hong Phuc said it would slow this year to around 21 percent from a previous government forecast of 22%.

“The year 2009 will be tougher than 2008 as we will be facing a strong impact from the global economic downturn,” Dung was quoted as telling a two-day cabinet meeting that closed on Wednesday in Ho Chi Minh City, Vietnam’s commercial centre.

Vietnam’s advantages this year were its political stability and large market with high purchasing power, Dung said.

“Now demand is huge while prices have fallen low, which is the right condition for enterprises to take opportunity to invest, raise production capacity and renovate technology,” he said.

Last Tuesday Dung told a business meeting that Vietnam’s main target for 2009 was to prevent economic slowdown and maintain growth at 6.0-6.5%.

The International Monetary Fund has forecast Vietnam’s growth next year to slow to 5% from 6.25% this year.

The government has said it would spend $1 billion on an economic stimulus package to fend off a serious slowdown and spur consumption.

Funds from the $1 billion package would help create soft loans with an annual interest rate of 4 percent per year and help small- and medium-sized businesses, Minister Phuc was quoted in the government statement as telling the cabinet meeting. (Reuters)