HANOI - The Asian Development Bank (ADB) forecast Vietnam's growth rate in 2011 will reach 5.8 percent against its previous estimation of 6.1 percent.

According to the Asian Development Outlook 2011, a report issued here on Wednesday by the lender, Vietnam's economic growth rate will rise to 6.5 percent in 2012.

The ADB also forecast inflation in Vietnam will slow down to 18 percent, high enough due to the rising cost of food and foodstuff, but will stand at 11 percent in 2012.

According to the ADB, Resolution No. 11 of the Vietnamese government is seen as a comprehensive package of policies that has obtained initial positive results in stabilizing the foreign exchange rate, increasing the state's foreign currency reserves and gradually reducing inflation during the June-August period.

However, it is too early now for Vietnam to loose the macroeconomic policies, because inflation per year is still over 20 percent. Loosing the tightened policies may decrease efficiency of efforts to stabilize the economy and reduce confidence of investors and consumers in the Vietnamese dong, hence giving a pressure on foreign currency reserves, said the report.

The short-term prospect relies on the Vietnamese government's commitment to continuing efforts in stabilizing the macro-economy. Continual and consistent implementation of Resolution No. 11 will help reduce inflation and lower the interest rate, thus encouraging investors and promoting economic undertakings, said the report.

According to Country Director of the ADB in Vietnam Tomoyuki Kimura, investors and Vietnamese people will have more confidence in the government's economic management if the policies and policy-making work are more transparent and consistent.

To stabilize the economy is the prime priority. However, to solve the roots of high inflation requires further efforts in renovating the mechanism. Renewals here include reducing the "bottle-neck" in production and distribution, ensuring safety for the financial sector, enhancing efficiency of public investment, and applying the market rules to the state-run major enterprises, said Tomoyuki.