HANOI, Vietnam — How quickly Asia's newest "Tiger Economy" has stopped roaring.

A year ago, Vietnam's stock market was one of the hottest on earth, the real estate market was soaring and economic growth blazing at 8.5 percent.

Exports were booming and foreign investment was flooding in, helped by the country's admission to the World Trade Organization.

Millions across the communist country celebrated the marvels of capitalism.

Today, inflation has hit 25 percent, pinching incomes, and workers have been striking for higher wages.

Property prices are falling and the stock market has plummeted to a two-year low, dashing the hopes of many people who expected to strike it rich.

Like thousands of other first-time investors in China and India, where shares also have plunged, Vietnamese are getting brutal lessons in the down sides of capital markets.

"My son and my husband are so angry at me," said Doan Kim, a retired nurse who lost 70 percent of her $20,000 nest egg in the stock market. "My life is not the same."

Many of the strengths that lured a record $20 billion in foreign investment to Vietnam last year remain in place.

The nation has a rapidly emerging middle class and has adopted many economic reforms in recent years.

Half its 84 million citizens are under age 30.

Sealed off by years of war and economic isolation, the nation has a pent-up demand for consumer goods, making it an attractive destination for retailers.

Leading Vietnam's growth were the booming telecommunications, manufacturing and construction industries, as well as exports of clothing, shoes, rice and coffee.

For now, foreign investment pledges are still rising, reaching $5.1 billion in the first quarter, up 36 percent from the same period a year ago.

But the government has slashed its growth target to 7 percent from as much as 9 percent, and the prevailing mood has soured dramatically.

Like economies around the world, Vietnam has been buffeted by soaring food and oil prices, and authorities are trying to rein in surging inflation.

The jump in food prices is hitting the poor especially hard.

Vietnam's government, eager to modernize the country, has also been spending freely on big infrastructure projects, incurring a large fiscal deficit and injecting lots of money into the overheating economy.

The nation's state-owned banks have been extending easy credit to the massive state-owned companies that still dominate Vietnam's economy.

Credit growth last year exceeded 50 percent, according to Jonathan Pincus, chief economist at the U.N. Development Program.

The central bank has raised interest rates and authorities have taken other steps to slow inflation. But it has not been moving quickly enough, hindered by a collective decision-making style and well-connected pressure groups with an interest in the status quo, Pincus said.

Pervasive corruption has also undermined economic efficiency.

Vietnam's economy has been among the world's fastest growing since it began accelerating free-market reforms a decade ago. But like many developing countries, it has found it difficult to restrain inflation while capital has flowed into the country.

"All of us gathered here today are only too aware of spiraling costs and the negative effect that inflation is having on the business environment in Vietnam," Michael Pease, chairman of the American Chamber of Commerce in Hanoi, said at a recent forum.

At the same meeting, the International Monetary Fund's country chief for Vietnam called on the government to curtail spending, raise interest rates and tighten credit to state-owned companies.

Despite its short-term difficulties, Vietnam is likely to continue making significant economic progress, said the IMF's Benedict Bingham.

"The longer-term economic reform story that made Vietnam such an attractive destination for foreign direct investment in recent years remains a compelling one," Bingham said.

The plunge in the country's stock market has been as stunning as its ascent. The benchmark VNindex surged 144 percent in 2006 and another 56 percent last year.

Giddy new investors flocked to securities companies that sprung up in Hanoi and Ho Chi Minh City, Vietnam's two biggest cities.

People swapped stories about freshly minted millionaires.

"Everybody made money," said Nguyen Tra Lan, an analyst with Thang Long Securities.

But many new investors had little, if any, knowledge about stocks. People engaged in "word-of-mouth" investing, often acting on rumors and tips from family and friends, Lan said.

And as they did, the market quickly became overvalued, said Dominic Scriven, director of Dragon Capital Group in Ho Chi Minh City.

"Share prices were much higher than they should have been," Scriven said.

Since hitting a high of 1,179 in March 2007, the key index has sunk by more than 60 percent, sinking to a two-year low of 384 earlier this month.