Hanoi  - Vietnamese Prime Minister Nguyen Tan Dung told cabinet officials that his government's focus on raising spending rather than restraining inflation had brought the economy back to growth, state media reported Thursday.

Speaking at the regular cabinet meeting Wednesday, Dung said government figures showed gross domestic product (GDP) growth for the year would likely reach 5 per cent, with inflation staying below 7 per cent, the Communist Party newspaper Nhan Dan reported.

Dung said there was "no need to raise the issue of readjusting economic policies" that have focused recently on stimulating growth rather than fighting inflation.

Vietnam implemented a 1-billion-dollar government stimulus package in November and loosened credit at commercial banks after economic growth fell sharply last autumn due to the global financial crisis.

Previously the government had pursued tight credit policies to fight inflation that reached 23 per cent in 2008.

At Wednesday's meeting, the Ministry of Planning and Investment reported industrial production grew 2.3 per cent month on month in July, and 7.6 per cent year on year. In the first seven months of 2009, it was up 5.1 per cent.

Overall GDP grew 3.9 per cent in the first half of the year.

Prices rose 0.5 per cent in July and are up 3.2 per cent so far this year, driven mainly by rising food prices.

The trade deficit was 3.4 billion dollars in the first seven months, down sharply from 15 billion dollars in the same period in 2008.

Foreign direct investment has slowed, with disbursed capital of 4.6 billion dollars through July, down 22.5 per cent compared with the same period last year.

Senior Vietnamese economist Nguyen Minh Phong told the state-run newspaper Tuoi Tre Thursday that growth of 5 to 5.5 per cent for the year was realistic, due to the government stimulus package and increased exports to Japan and other markets.

But Deputy Minister of Trade Do Huu Hao said reaching the government target of 3 per cent export growth would be difficult, as exports fell 10 per cent in the first seven months.

In its session ending June 19, Vietnam's National Assembly revised its target for 2009 GDP growth down to 5 per cent from 6.5 per cent. (dpa)