By Huw Watkin
Herald correspondent
HANOI - Growth in Vietnam's GDP has fallen close to 3.5 per cent, and observers believe the country will fall further behind in the months to come.
Official figures revealed growth had fallen from 6.16 per cent in the first half of last year to 4.3 per
cent to the end of June, but the International Monetary Fund said GDP growth figure for the whole year could fall to as low as 3 per cent.
The IMF maintained there may be a slight improvement to 4 per cent next year, but its optimism was not shared by other observers of Vietnam's economy.
Hanoi has targeted growth at between 5 and 6 per cent for 1999, but foreign diplomats said that target was unrealistic, with some predicting Vietnam could plummet towards zero growth next year unless the country's leadership embraced tough economic reforms aimed at boosting foreign investment.
"General economic activity is down as very little plant is being built, the population is growing at more than two per cent and inflation is running at around seven per cent," said one diplomat.
"When you consider that, it's clear that GDP per capita is actually falling more significantly than overall GDP figures."
Government figures revealed that growth had dropped back in every sector except agriculture, which had seen a boost from 2.12 to 2.7 per cent over the first six months of last year because of a bumper rice crop.
Industry and construction were down to 7.4 per cent from close to 10 per cent to June last year while the state-owned industrial sector plunged from 10.2 to 3.6 per cent.
The IMF's resident representative in Hanoi, Erik Offerdal, said that economic activity had slowed significantly along with Vietnam's pace of economic reform and that recovery was far from certain.
"Countries like Thailand, the Philippines and Indonesia are taking significant reform steps which means they are likely to be much more attractive for investors."
