Vietnam GDP growth accelerates after dong devaluation

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vietnam-economyVietnam’s economic growth quickened in the second quarter as the outlook for exports improved after the dong was devalued for the first time in a year.

Gross domestic product rose 5.25 per cent in the second quarter from a year earlier, according to data released by the General Statistics Office in Hanoi on June 27. That compares with a revised 5.09 per cent pace in the three months through March. The economy expanded 5.18 per cent in the first half from a year earlier.

The State Bank of Vietnam last week devalued the dong to help spur exports after anti-China protests in May halted production at foreign-owned factories and caused Chinese workers to flee. The government is trying to bolster an economy that the World Bank estimates will expand 5.4 per cent this year, below a government target of 5.8 per cent.

“Vietnam’s high gearing to the external sector looks to be paying off,” said Philip McNicholas, a senior economist at BNP Paribas SA in Hong Kong. Today’s data “puts it on course for a strong performance over the rest of the year,” he said, adding that the dong’s devaluation should help exporters regain competitiveness.

The central bank devalued the dong on June 18 by weakening its reference rate for the currency by 1 per cent to 21,246 per dollar. The change allows the dong to fluctuate as much as 1 per cent on either side of the central bank’s fixing. The currency has slipped more than 1 per cent this year.

Vietnam has also stepped up efforts to overhaul debt-laden banks and spur lending to businesses. Prime Minister Nguyen Tan Dung has repeatedly called on the central bank to lower lending rates and help companies, as the highest level of bad debt among Southeast Asia’s biggest economies curbed credit growth.

Bank lending rose 1.31 per cent as of May 23 from year-end 2013, according to the central bank. That compares with a full-year target of 12 per cent to 14 per cent. Disbursed foreign direct investment in the first half was estimated at $5.75 billion, an increase of 0.9 percent from the year before, the Ministry of Planning and Investment said this week.

Inflation in Vietnam quickened to 4.98 per cent in June from a year earlier. Price gains for the full year may average about 5 per cent, Nguyen Duc Thang, head of consumer price statistics, said at a briefing on June 27. Industrial production rose 6.1 per cent in June from a year earlier, data showed.

Vietnam’s growth potential is “robust, given an export manufacturing sector that is well-diversified and increasingly oriented toward higher value-added goods,” Standard & Poor’s said yesterday, while affirming its BB- rating on the nation with a stable outlook.

Exports rose 14.9 per cent in the first six months from the same period last year and imports climbed 11 per cent. The trade surplus for the first half of the year was $1.3 billion.

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Reading Time: 2 minutes

Vietnam’s economic growth quickened in the second quarter as the outlook for exports improved after the dong was devalued for the first time in a year.

Reading Time: 2 minutes

vietnam-economyVietnam’s economic growth quickened in the second quarter as the outlook for exports improved after the dong was devalued for the first time in a year.

Gross domestic product rose 5.25 per cent in the second quarter from a year earlier, according to data released by the General Statistics Office in Hanoi on June 27. That compares with a revised 5.09 per cent pace in the three months through March. The economy expanded 5.18 per cent in the first half from a year earlier.

The State Bank of Vietnam last week devalued the dong to help spur exports after anti-China protests in May halted production at foreign-owned factories and caused Chinese workers to flee. The government is trying to bolster an economy that the World Bank estimates will expand 5.4 per cent this year, below a government target of 5.8 per cent.

“Vietnam’s high gearing to the external sector looks to be paying off,” said Philip McNicholas, a senior economist at BNP Paribas SA in Hong Kong. Today’s data “puts it on course for a strong performance over the rest of the year,” he said, adding that the dong’s devaluation should help exporters regain competitiveness.

The central bank devalued the dong on June 18 by weakening its reference rate for the currency by 1 per cent to 21,246 per dollar. The change allows the dong to fluctuate as much as 1 per cent on either side of the central bank’s fixing. The currency has slipped more than 1 per cent this year.

Vietnam has also stepped up efforts to overhaul debt-laden banks and spur lending to businesses. Prime Minister Nguyen Tan Dung has repeatedly called on the central bank to lower lending rates and help companies, as the highest level of bad debt among Southeast Asia’s biggest economies curbed credit growth.

Bank lending rose 1.31 per cent as of May 23 from year-end 2013, according to the central bank. That compares with a full-year target of 12 per cent to 14 per cent. Disbursed foreign direct investment in the first half was estimated at $5.75 billion, an increase of 0.9 percent from the year before, the Ministry of Planning and Investment said this week.

Inflation in Vietnam quickened to 4.98 per cent in June from a year earlier. Price gains for the full year may average about 5 per cent, Nguyen Duc Thang, head of consumer price statistics, said at a briefing on June 27. Industrial production rose 6.1 per cent in June from a year earlier, data showed.

Vietnam’s growth potential is “robust, given an export manufacturing sector that is well-diversified and increasingly oriented toward higher value-added goods,” Standard & Poor’s said yesterday, while affirming its BB- rating on the nation with a stable outlook.

Exports rose 14.9 per cent in the first six months from the same period last year and imports climbed 11 per cent. The trade surplus for the first half of the year was $1.3 billion.

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