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Q2 growth lowest in 5 years

Released at: 08:39, 30/06/2016

Q2 growth lowest in 5 years

Photo: Duc Anh

Economic indicators for second quarter and first half released by GSO and FIA.

by Duy Anh

Vietnam’s GDP growth in the second quarter of 2016 was 5.55 per cent; the lowest quarterly result in two years, the General Statistics Office (GSO) said on June 28.

GDP in the first half reached 5.52 per cent year-on-year, down from the 6.32 per cent growth rate in the same period last year, according to GSO.

“The first quarter of 2016 saw steady growth but was not as high as in the same period of 2015,” Director of the National Accounts System Department (NASD) at the GSO, Mr. Dao Quang Tuyen, said at its quarterly press briefing. Vietnam’s economy in the second quarter grew 0.07 per cent against the first quarter, lower than the growth of 0.2 per cent to 0.3 per cent in previous years. “This means that growth in the second quarter of 2016 is down year-on-year,” he said.

Adverse weather, including drought in the coffee belt of the central highlands and salinity in the food basket of the Mekong Delta has affected industrial and agricultural production as well as exports and imports. Agriculture output fell 0.8 per cent in the first six months of the year against the same period of 2015, the GSO report noted.

Vietnam has targeted GDP of 6.7 per cent this year, meaning growth in the second half will need to be around 7.6 per cent if the target is to be met, Mr. Tuyen said. “This may be difficult given the current state of the economy,” he said.

Analysts from the International Monetary Fund have also acknowledged that Vietnam’s economy has been hit by drought, which has affected agriculture. “Vietnam’s 2016 growth will be moderate, at around 6 per cent, reflecting the adverse agriculture shock, lower external demand and spillovers of tighter global financial conditions,” its analysts wrote in its most recent assessment on Vietnam, released on June 27.

Meanwhile, the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment (MPI) has reported that disbursement of foreign direct investment (FDI) was $7.25 billion as at June 20, a 15 per cent increase year-on-year.

The FIA also reported that, as at June 20, there were 1,145 FDI projects registered this year with total investment of $7.497 billion, up 95.3 per cent in capital compared to the same period last year. There were also 535 projects that adjusted their investment, by a total of $3.785 billion, up 129 per cent year-on-year.

“We predict that from now to the end of the year the number of FDI projects registered will only increase by 10 to 15 per cent against last year,” Deputy Director of the FIA Nguyen Noi was quoted as saying. “Disbursement will be around $15 billion.”

According to GSO reports for the first half of the year, exports stood at $82.2 billion and imports $80.7 billion, for a trade surplus of around $1.5 billion.

Vietnam exported some $37.4 billion worth of heavy industry goods and mining commodities, some $33.5 billion worth of light industry goods and handicrafts in the first half, accounting for 45.5 per cent and 40.7 per cent, respectively of the country’s total export value.

Conversely, the country mainly imported machinery and manufacturing materials, accounting for 91.3 percent of the total import value, while consumption goods made up only 8.7 per cent.

The domestic sector is likely to see a trade deficit of $9.7 billion while the foreign sector will post a surplus of $11.2 billion.

Vietnam’s economy grew 6.68 per cent in 2015, the fastest pace since 2007 and extending the growth momentum that began in 2012, when it slipped to 5.25 per cent from 6.24 per cent in 2011.

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