Vietnam’s economy grew at the fastest pace in Asia this year, signaling momentum before risks from a global slowdown began to materialize.
GDP rose 8.02 percent in the year through this month, official data reported yesterday showed.
Growth was faster than the Vietnamese government’s initial target of 6 percent to 6.5 percent growth, and was aided by a quicker-than-expected 5.92 percent expansion in the final quarter.
Photo: Reuters
Manufacturing, which grew 8.1 percent during the year, was the main driver of economic growth, Vietnamese General Statistics Office head Nguyen Thi Huong said.
Strong improvement in services also supported growth.
The better-than-expected showing gives the State Bank of Vietnam the space to wait and watch before deciding to pivot monetary policy away from tightening.
Although the central bank has raised the benchmark rate by 200 basis points in two moves this year to 6 percent, looming fears of debt default in Vietnam’s property sector has raised concern about a “China-style” growth hit.
Although Vietnam “is performing well amid uncertainties in the global economy, risks to the economic outlook have become elevated,” the Asian Development Bank (ADB) said in a statement on Dec. 14.
“Though trade continues to expand, signs show weakening global demand for the country’s exports,” it said.
ADB forecasts Vietnam’s growth to be 6.3 percent next year, as major trade partners see a slowdown.
The weakness was already evident in the headline trade data. Exports this month declined 14 percent from a year earlier, the second straight month of decline.
Retail sales during the month rose 17.1 percent, while credit growth improved 12.9 percent.
That was accompanied by consumer price growth of 4.55 percent from a year ago this month. Core inflation, which excludes prices of food, fuel, healthcare and education services, climbed at a faster rate of 4.99 percent.
Vietnam is likely to struggle to keep inflation in check next year, said Bui Thuy Hang, the central bank’s monetary policy department deputy head.
The country would face consumer price increases, with inflation forecast at about 5 percent early next year, higher than the government’s full-year target of 4.5 percent, Hang told an economic forum in Hanoi on Dec. 17.
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