* Q3 GDP may rise to 5.5-5.6 pct y/y-newspaper
* Vietnam is "tackling" economic challenges-Fitch
* Inflation projected at 7 pct in 2012-govt
(Adds Fitch Ratings report, comments)
By Ho Binh Minh
HANOI, Sept 7 Vietnam's economic growth could
accelerate to 5.5-5.6 percent in the third quarter from a year
earlier and be 5.1 percent for the full year, state media said.
Also on Friday, Fitch Ratings said Vietnam is "tackling" its
economic challenges. It also sees the economy as growing about 5
percent this year, compared with 2011's 5.89 percent.
Vietnam's economy has been growing at a slower pace this
year as the government shifted its policy to tightening lending
in the early months of the year to help control inflation. Banks
battling bad debt also slowed loans to keep their books clean,
putting pressure on businesses seeking funds for expansion.
In the first quarter, growth was 4 percent from a year
earlier, and in the second quarter, the pace rose to 4.66
"While demand in the economy has yet to become strong, there
have been positive moves," the official Vietnam Economic Times
newspaper cited Planning and Investment Ministry assessments as
President Truong Tan Sang told a business forum that's part
of the Asia-Pacific Economic Cooperation summit in Russia: "We
are striving to stabilise the macro economy, maintaining
reasonable growth and implementing a master plan to restructure
In its report, Fitch said Vietnam "is tackling the
challenges of greater inflation pressures, a fragile balance of
payments position and a weak banking sector with greater vigor."
It noted that Vietnam's foreign exchange reserves increased
to $20.8 billion at the end of May from $14.1 billion in
August's inflation slowed to an annual rate of 5.04 percent,
the lowest since December 2009, the government said.
BANKING SECTOR CONCERNS
Fitch said the banking sector "remains a large source of
risk given the rising non-performing loan ratio."
It gave no value for bad debt. The central bank estimated
bad debt to account for 8.6 percent of total loans at the end of
March, doubling the previously published figures.
Last month, the central bank allowed lenders to raise their
credit growth targets to up to 27 percent from a cap of 17
percent in a bid to boost lending and spur economic expansion.
State budget disbursement could have jumped to 24-25
trillion dong ($1.15-$1.2 billion) in August from an average
16-18 trillion dong per month in the first half, the Vietnam
Economic Times said.
Domestic consumption could recover slightly by the year-end,
supported by credit expansion in the economy, HSBC said in a
report on Tuesday.
Core inflation in August was 0.65 percent against July, up
from 0.6 percent in July and 0.1 percent in June, and the
monthly inflation rate could be high in the last months of this
year, the report cited government data as saying.
The National Financial Supervisory Committee forecast
Vietnam's annual inflation this year at 6 percent, below a
government's revised target of 7 percent, the
Consumer prices in 2011 jumped nearly 19 percent, compared
with 9.19 percent the previous year.
Vietnam's average consumer price index growth could ease to
8.4 percent this year after a rise of 8.6 percent in 2011, the
HSBC report said.
(Editing by Kim Coghill and Richard Borsuk)