Vietnam’s first-half growth highest in seven years

HO CHI MINH CITY - Vietnam’s first half 2018 GDP reached its highest expansion rate since 2011. Growth in Q2 was recorded at 6.79% YoY, following upward revision of the Q1 figure from 7.38% to 7.45% YoY. This put first half growth to an seven-year high of 7.08% YoY.

The solid expansion was fuelled by positive performance of major sectors, with industry and construction remaining a key pillar of the economy, showing a rise at 9.07% YoY (versus 5.81% YoY in H1 2017), contributing 48.9% to overall GDP, due primarily to the manufacturing sub-sector’s remarkable surge of 13.02% YoY.

The Vietnam PMI accordingly displayed a substantial monthly improvement, up to 55.7 in June (from 53.9 in May), againthe highest expansion since March 2011 and the strongest in the ASEAN. It was driven by a sharp increase of new orders and robust client demand.

Vietnam Asset Management (VAM) says impressive growth was also observed in the service sector, which jumped 6.9% YoY, the best result in seven years, thanks largely to stable consumer demand and a continued boost in international visitor arrivals, up 27.2% YoY. The agriculture/forestry/fishery sector posted a recovery of 3.93% YoY.

Foreign investment disbursed in H1 2018 was estimated at US$8.4 billion (+8.4% YoY), while total FDI pledges in June reached US$10.4 billion, exceeding the entire amount registered in 5M2018 (US$9.9 billion) and leading to a H1 2018 figure of US$20.3 billion (+5.7% YoY).

This was mainly supported by a number of mega projects announced this month, notably the US$4.2 billion Smart City project by the JV between Japan’s Sumitomo and Vietnam’s BRG.

On the trade front, although June recorded an estimated modest trade deficit of US$100 million, YTD experienced a trade surplus of US$2.71 billion (vs. a trade deficit of US$2.7 billion for the same period last year). www.vietnamam.com (ATI).