Vietnam economic growth quickens
- Published: 27/06/2013 at 05:34 PM
- Online news:
HO CHI MINH CITY - Vietnam's economic growth accelerated in the second quarter after the central bank cut interest rates to revive lending to businesses and rising foreign investment boosted the nations exports.
Motorcyclists ride near residential buildings under construction in a newly developed area of Hanoi. Rapid urbanisation since the communist nation switched to a market economy in the 1990s has left the country's biggest cities like Hanoi and Ho Chi Minh City heavily congested due to the lack of adequate infrastructure. (AFP file photo)
Gross domestic product grew 5% in the second quarter from a year earlier, according to figures released on Thursday by the General Statistics Office in Hanoi. The economy expanded 4.9% in the first half from a year earlier, the data showed, compared with a median estimate of 5% in a Bloomberg News survey of seven economists.
Vietnam's central bank has cut its refinancing rate eight times since the beginning of 2012 to spur lending, and the government is setting up an asset management company to clear bad debt. The legislature last week voted to lower the corporate income tax rate to help businesses, while disbursed foreign investment rose 5.6% in the first half of the year to US$5.7 billion, according to the Ministry of Planning and Investment.
``This isn't going to be a strong growth year, but the economy is stabilising,'' said Gaurav Gupta, the Hanoi-based managing director at General Motors Co's Vietnam unit, citing lower interest rates and inflation than in previous years. This year should set the base for the government to take actions to drive growth faster in the future.
The dong has slipped about 0.4% this quarter, a smaller decline compared to other regional currencies including the Philippine peso and the baht. The benchmark VN index has gained almost 16% this year.
The economy expanded a revised 4.76% in the first quarter from a year earlier, and is set for a third straight year of sub-6% growth for the first time since 1988. The government targets 5.5% for this year after a 5.03% pace last year, the slowest since 1999.
Vietnam's GDP may rise 6% in 2014, according to a directive by Prime Minister Nguyen Tan Dung posted on the government website this week. It also urged implementing monetary policy with the aim of stabilising the currency in order to efficiently supply capital in the economy.
Exports in the first half rose 16.1% to $62.05 billion from the same period a year earlier, while imports climbed 17.4% to $63.5 billion for a trade deficit of $1.4 billion, the Statistics Office said on Thursday.
``Most of the growth is coming from the foreign-invested sector, ``said Dominic Mellor, a Hanoi-based economist at the Asian Development Bank. ``That's how Vietnam has been able to sustain its exports and, to some degree, its growth.''
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