Vietnam quarterly growth hits two-year high on exports, investment

Last Updated on October 7, 2024 9:18 am

Gross domestic product grew 7.4% year-on-year in the third quarter, surpassing the second quarter’s revised 7.09% expansion, the government’s General Statistics Office said in a report.

Vietnam reported its strongest economic growth in two years in the quarter to end-September, as strong exports and industrial production and rising foreign investment offset the effects last month of Asia’s strongest typhoon so far this year.

Gross domestic product grew 7.4% year-on-year in the third quarter, surpassing the second quarter’s revised 7.09% expansion, the government’s General Statistics Office said in a report.

Vietnam is a regional manufacturing hub for multinational corporations including Samsung Electronics and Apple suppliers Foxconn and Luxshare, and has drawn a steady influx of foreign investment.

“The world economy is stabilising as global trade in goods improves, inflationary pressures ease, financial conditions continue to loosen and labour supply increases,” the statistics office said.

Data for September showed that exports rose 10.7% from a year earlier while industrial production was up 10.8%, it said.

Foreign investment inflows in the first nine months of this year rose 8.9% from a year earlier to $17.3 billion.

Northern Vietnam has been reeling from the impact a month ago of Typhoon Yagi, which killed more than 300 people, disrupted power supplies and halted industrial production. Authorities estimated property damage at $3.3 billion.

S&P Global’s purchasing managers index (PMI) for Vietnam manufacturing fell to 47.3 in September from 52.4 in August, the biggest decline in the indicator of the sector’s health since November last year.

“The storm brought an end to a period of strong growth in the sector,” said Andrew Harker, director at S&P Global Market Intelligence. “Heavy rain and flooding caused temporary business closures and delays to both supply chains and production lines.”

Vietnam is targeting GDP growth of 6.0% to 6.5% this year and aims to keep inflation below 4.5%.

Consumer prices in September rose 2.63% from a year earlier, the statistics office said in its Sunday report. Retail sales rose 7.6%.

For the first nine months of this year, exports rose 15.4% from a year earlier to $299.63 billion while imports were up 17.3% at $278.84 billion, for a trade surplus of $20.79 billion, the office said.

The International Monetary Fund late last month forecast Vietnam’s GDP growth at 6.1% this year, while the Asian Development Bank put it at 6.0%.

This year’s growth is “supported by continued strong external demand, resilient foreign direct investment, and accommodative policies”, the IMF said in a report.

Both the IMF and the ADB, however, warned that geopolitical tensions and uncertainties could hurt external demand, Vietnam’s key growth driver.