Since Vietnam joined the World Trade Organization at the end of 2006, investment into the country has accelerated, and the longer term picture still remains excellent. Much of the import growth is for capital goods which will boost productive capacity and infrastructure which augers well for long term economic prosperity. However, the speed of development and investment has left the economy reeling. An uncontrolled surge in money supply in 2008, together with spectacular growth in imports is leading to short term instability in the economy. At the time of writing, it is possible that the current high inflation rate of plus 20 percent will require severe action by the government if a wider economic crisis is to be avoided.
Far from running for the exit at the first sign of trouble, foreign investors are still falling over themselves to pour money into the country in the firm belief that the short-term economic issues are nothing but a blip in the long-term path to prosperity. Vietnam’s future remains bright with the majority of citizens still believing they are in the midst of an economic boom. GDP growth forecasts for the year have been reigned in to 7.5 percent, with the consensus view of about 7.6 percent for 2009.
