No recovery is apparent from the dwindling foreign investment, down 30 percent this year. Nor is one evident in the trends of credit growth, domestic investment or agricultural production, which was recently hard hit by floods and low prices for rice and rubber.

Foreign executives have not witnessed much of a rebound either. They express exasperation at the bureaucracy, the socialist traditions and the Politburo's recent freezing of a deal to normalize trade relations with the United States.

A new report by the World Bank also offers scant evidence of an economic turnaround. The report predicts that the 4 percent growth of the past two years - a generous estimate according to most foreign observers - could fall to 3 percent if reforms stall. That forecast contrasts with the 8 percent growth achieved early this decade. The World Bank is dangling more reform-linked aid, yet the Vietnamese seem unlikely to take it.

But despite the continued pressures on the economy, there is evidence that a long-awaited turnaround is near.

The first sign is a revival of exports, which have risen 20 percent this year because of higher oil prices and a recovery in growth of manufactured exports, mostly shoes and garments. The second and less obvious sign is a gradual improvement in capacity utilization.

If the government capitalized on these nascent signs of recovery by accelerating liberalization rather than maintaining its current defensive posture, the apparent trend could be sustained.

The banking system, despite being saddled with state enterprise debts, is liquid and private banks are gradually expanding their position.

The rural sector, which has underpinned Vietnam's achievement in reducing poverty, will pick up on its own, especially if price and trading controls are lifted.

There is now a realization, reflected in the recent national Assembly meeting, that the economy is underperforming. That realization included these assessments:

Growth must be accelerated to absorb more than 3 percent growth in the work force, which in turn means lots of small scale, labor-intensive enterprises, not a few capital intensive ones.

The poor performance of state enterprises, which absorb more than 50 percent of bank credit, is stifling the rest of the economy, denying credit to the small but fast-growing private sector and limiting public spending on roads, education, and other crucial areas.

The real attractions that brought a flood of foreign investors five years ago are still here: low-cost labor; an agricultural base growing at a healthy 3 percent or more; an entrepreneurial tradition, especially in the south, and good links to the outside world. The Taiwanese are still investing and will do more if there is full access to the U.S. market.

Change will be slow. Legal minutiae and interagency feuding will continue to frustrate everyone. But the business cycle remains, suggesting that prospects for Vietnam's recovery may be better than previously thought.