Vietnam economy picks up in Q2, but virus could weigh on outlook
VIETNAM’s economic growth accelerated in the second quarter (Q2) on resurgent global demand, even as the country’s worst outbreak of the pandemic temporarily shuttered key manufacturing hubs.
Gross domestic product (GDP) rose 6.61% in the second quarter compared to a year earlier, up from a revised 4.65% in the first quarter, the General Statistics Office said Tuesday. That compared to the median estimate of 7.2% in a Bloomberg survey of six economists.
Growth picked up on increases in industrial output as demand recovered in global markets, and as favorable weather boosted agricultural products, Nguyen Thi Huong, head of the General Statistics Office, said in a briefing in Hanoi. Increased government spending also helped drive the expansion, she said.
The country’s benchmark stock index was up 0.4% at the noon break. The dong currency was stable, trading at 23,023 per dollar as of 12:29 p.m. local time, according to prices from banks in Hanoi compiled by Bloomberg.
Vietnam was successful at limiting infections during the early months of the pandemic, but an outbreak that began in late-April forced the temporary closure of industrial parks housing key electronics manufacturing hubs. Tenants included units of Foxconn Technology Group and suppliers of Samsung Electronics Co. and Apple, Inc.
“Looking past the jump in year-on-year growth due to a weak base for comparison, GDP data suggest that Vietnam is facing a heavy economic toll from its efforts to control the virus,” Gareth Leather, senior Asia economist at Capital Economics Ltd., wrote in a research note. “With sporadic outbreaks continuing, the economy is likely to suffer further in the months ahead.”
The economy expanded 5.64% for the first six months of the year, below the government forecast of 5.8% growth, which was already revised down from January’s 6.22% outlook for the first half. The government expects GDP to grow 6%-6.5% for the full year.
The economy would need to expand at a 6.3% clip over the next six months to reach 6% growth for the full year, said Le Trung Hieu, head of the GDP dept. in the statistics office.—