“…A flurry of new building in downtown Hanoi, endless swarms of new motorbikes in Ho Chi Minh City: by some standards Vietnam’s economy is powering into 2010. But many economists and business executives remain stubbornly gloomy.

Vo Truong Son should be a happy man. But sitting in his office high above the central Vietnamese town of Pleiku, the deputy general manager of Hoang Anh Gia Lai, one of the country’s largest privately owned conglomerates, doesn’t seem to be celebrating either the company’s healthy results or the fact that Vietnam was one of the world’s strongest performers last year.

“I think the first half of 2010 will be hard due to the high interest rates and tighter monetary policy, and the problems with the balance of payments,” said Mr Son.

Vietnam’s communist government, weaned on running a command economy, has struggled with the nuances of using market mechanisms to direct and control growth. Over the past two years there have been violent swerves from austerity to stimulus and back again as the economy moved through inflation, the global crisis and now renewed signs of overheating.

But for an economy that has relied on exports and foreign direct investment for much of its growth over the past decade, Vietnam has survived the global slowdown remarkably well.

Statistics released last week show the country’s economy grew 5.32 per cent last year, down from its average of more than 7 per cent over the preceding four years, but still substantially stronger than the expectations of many of its competitors. The construction sector grew 11.4 per cent and retail by 18.4 per cent.

Mr Son is not alone in his glum assessment of the future, however, with many analysts warning that the biggest threat to the Vietnamese economy is overheating.

“I’m afraid it is a bit of a bubble again,” said Terence Mahony, a long-term investor in Vietnam. “They have two negative deficits, both the budget and the current account.” Like other businesspeople and economists, he fears Vietnam has returned to a state of chronic trade deficit. After running a surplus in the first half of the year, imports are again on the rise, and the deficit hit $1.97bn (€1.36bn, £1.22bn) in November.

That has been coupled with a rising budget deficit that the World Bank estimates will hit 9.7 per cent of GDP this year after expenditure on a stimulus programme which the bank estimates has cost the country almost $4bn, or 4 per cent of GDP. At the end of November, the government moved to tighten fiscal and monetary policy.

The dong was devalued by over 5 per cent, interest rates were raised by 100 basis points, state-owned enterprises were encouraged to sell their hoarded dollars to ease a foreign exchange liquidity crisis, and business was told that the flagship element of the stimulus programme, a four percentage point interest rate subsidy, would be wound up at the end of the year, despite pleas that it be continued.

The result has been a crisis of confidence that provoked a flight into dollars and gold. Exporters hoarded dollars. Retail investors, many of whom had been caught out by the 70 per cent fall in the stock market, moved into gold, turning Ho Chi Minh City hotel cafés into impromptu gold trading floors.

Last week, the government moved to try to regain some control over the exuberance of the market, ordering gold trading floors to shut by the end of March. Jewellery and retail sales – the bulk of the non-speculative market – will be allowed to continue.

But Benedict Bingham, the head of the International Monetary Fund in Hanoi, says that although there is some froth on the top of the economy, it is underpinned by solid fundamentals.

“There is some underlying resilience, stemming primarily from the fact that household balances were in quite good shape going into the crisis, so the Vietnamese consumer kept on buying,” said Mr Bingham.

But Mr Mahony says that although the global economy is improving, that might not be enough without a change of attitude at the top.

“I think it is still a horribly centralised approach to economics. They don’t understand the capitalist flows of the economy: they are control freaks.”