Vietnam’s economic growth unexpectedly accelerated last quarter, buoyed by manufacturing and exports before a super typhoon in September caused widespread damage and prompted warnings of a challenging end to the year.
Gross domestic product rose 7.4% in the three months ended September from a year earlier, the General Statistics Office said Sunday. That compares to a 6.1% median estimate in a Bloomberg survey and a revised 7.09% expansion for the second quarter.
Vietnam’s economy has shown resilience this year as investment pours in, with Prime Minister Pham Minh Chinh vowing to cut logistical costs and improve infrastructure. The government has sought to pull in capital from foreign tech giants such as Samsung Electronics and Intel as the country emerges as a viable alternative to China in the production of electronics such as smartphones to basic semiconductors.
Investment and industry, especially manufacturing are among “the driving forces for growth” in the third quarter this year, the statistics office said. Big gains in agriculture and other sectors in July and August helped limit the effect of serious damage to crop output due to Super Typhoon Yagi last month, according to Nguyen Thi Huong, head of the general statistics office.
Yagi battered Vietnam’s northern provinces, killing hundreds and wreaking economic damage that’s estimated at more than US$3 billion ($3.91 billion). Factory activity in the trade-reliant economy contracted for the first time in five months in September, reflecting the severity of the storm, according to an S&P Global purchasing managers’ index report.
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The government’s latest 2024 GDP growth target of 6.8%-7% will be “a big challenge” as the impact of Yagi, geopolitical tensions and global economic concerns weigh on expansion, Huong said at a briefing in Hanoi. Authorities earlier predicted a hit of 0.15 percentage points to this year’s growth.
The State Bank of Vietnam may “turn more dovish” by lowering interbank interest rates to aid the economy after Yagi, according to Mitsubishi UFJ Financial Group.
The International Monetary Fund expects Vietnam to grow 6.1% this year, slightly faster than its previous estimate, supported by “continued strong external demand, resilient foreign direct investment, and accommodative policies”, according to a Sept 27 statement.
Chart: Bloomberg
