Vietnam’s Q3 growth quickens solid expansion in industry, exports, services helps economy
HANOI: Vietnam’s economic growth in July-september quickened to 7.46 per cent compared with a year ago in the strongest third quarter growth since 2011, the statistics office said on Friday, backed by solid expansion in the industry and services sectors and exports.
In January-september, growth hit 6.41 per cent, the strongest for the same period since 2015, the General Statistics Office said in a report, a positive signal for the Southeast Asian nation as its pushes to hit its full-year growth target of 6.7 per cent. The third quarter on-year growth accelerated from 6.28 per cent in the second quarter.
While most Asian economies are yet to report third quarter growth figures, Vietnam’s data suggests it could be one of the region’s best performing economies in the period based on expectations for other countries.
Reaching its full-year growth target is important for Vietnam. It failed to hit the target and slowed for the first time in four years in 2016, which was pro-investment Prime Minister Nguyen Xuan Phuc’s first year in office.
The government has said Vietnam needs to grow 7.4 per cent in the second half of 2017 to achieve the full-year goal, and has called for an increase in credit growth to 21 per cent this year despite concerns over bad loans, lower interest rates and an increase in investment.
Capital Economics Senior Asia Economist Gareth Leather said despite the upbeat short-term outlook, which has been helped by firm exports and accommodative monetary policy, risks are building.
“In particular, we are increasingly concerned by the rapid increase in debt,” Leather said. “Credit booms on the scale that Vietnam is experiencing are not sustainable over the long term.”
The industry and construction sectors grew 7.17 per cent annually in the first nine months of this year, while the services sector expanded 7.25 per cent in the same period and the agriculture area grew 2.78 per cent, the report said.
The industrial index of production in September rose an estimated 13.2 per cent from the same month last year, the highest growth since February, while trade surplus extended to the third straight month in September at $400 million, data by the statistics office showed.
Vietnam received an estimated $12.5 billion in foreign direct investment (FDI) in the first nine months of this year, up 13.4 per cent from the same period in 2016. Vietnam’s FDI inflow hit a record high of $15.8 billion last year.
Developing Asia is on track to grow faster this year and next, the Asian Development Bank said, buoyed by a pick-up in world trade and China’s expansion, but it flagged risks from tightening US monetary policy.