Growth in the second quarter accelerated from the previous quarter’s 5.05% increase. The statistics office raised the country’s growth for the first quarter of this year by 0.02% from its previous announcement.
Vietnam’s GDP fell 6.02% in the July-September quarter of 2021 due to stricter Covid-19 restrictions than those in neighbouring countries. But the domestic economy has gradually warmed.
Growth has been led by exports to the US — the country’s biggest export destination — rising 22.5% on the year in the first six months and pushing export value to the US to US$55.9 billion. The total export value in the second quarter grew 21% from the same period in 2021.
South Korea’s Samsung Electronics makes up about 20% of Vietnam’s total export value, and shipments of Samsung smartphones in Vietnam remain solid.
The country’s export value of textiles and apparel stood at a record high in the first six months, according to data from the Vietnam Textile and Apparel Association.
Vietnam’s relatively low labour costs have positioned the country as the first candidate for a “China plus one” supply-chain diversification strategy. As the US-China rivalry intensifies, many manufacturers continue to build or add factories in Vietnam. A nearly two-month-long lockdown in Shanghai “has prompted us to beef up production in Vietnam temporarily,” said a representative of a foreign-affiliated garment factory.
Meanwhile, Hiromasa Matsuura, chief economist at Mizuho Research and Technologies, said: “The recovery of the world economy has helped Vietnam’s export-led economic growth.”
Vietnam’s domestic consumption has continued to recover as the pandemic subsides. Retail sales, including services, grew 19.5% on the year in the April-June quarter.
With tourism accounting for about 10% of GDP, Vietnam started accepting foreign tourists in mid-March for the first time in about two years. A local government official in Danang, a resort city in central Vietnam, said the city’s economy grew 12.3% in the April-June quarter.
Nonetheless, soaring crude oil prices have increased inflationary pressure, with some experts expressing doubts about whether the country can continue to grow at a high rate.
Vietnam’s trade with Russia accounts for less than 1% of the total and thus has little direct impact on GDP, but the country’s consumer price index rose 3.37% year on year in June. Vietnam is a net importer of crude oil. The price index has grown rapidly in the transport sector, indicating inflationary pressure.
Hanoi is aiming for growth of between 6.0% and 6.5% this year. But the World Bank forecasts 5.8%. Some observers expect the government will have a tough time achieving its target due to inflation, among other reasons.