The Asian Development Bank (ADB) made the forecast in its annual publication -- Asian Development Outlook 2009 -- released in Hanoi on April 13.

Its projection is based on the Vietnamese government’s commitment to apply a tight monetary policy to keep the fiscal deficit at 8.3 percent of GDP and the credit growth of 25 percent this year.

The report emphasised the importance of macroeconomic stability, since investor confidence is the key factor behind the government’s efforts to attract large inflows of foreign direct investment and to ensure that the capital account surplus is larger than the current account deficit to result in the increased foreign exchange reserve.

As Vietnam will implement the new socio-economic development plan for 2011-2015 as a middle income country, focus on efficiency will enable it to integrate deeper into the regional and global value chains, said the report.

However, Ayumi Konishi, ADB Country Director for Vietnam, warned that without improving the economic efficiency, efforts to achieve higher growth will inevitably lead to the return of high inflation.

The bank said that in the face of the runaway inflation, the government should focus on macroeconomic stability rather than rapid growth, and that efforts to improve the economy’s efficiency are essential for Vietnam's sustainable development as a middle income country.

The bank also acknowledged steps taken by the government to improve governance and the business environment. It said the ongoing efforts under Project 30 to reduce administrative procedures are on the right track.