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GDP seen quickening from 1Q to hit 6%-6.5% target this year
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End to war in Ukraine is key to hit upper end of GDP range
Vietnam, Southeast Asia’s fastest-growing economy, reaffirmed its outlook for an expansion of much as 6.5% this year, seeing activity pick up from a slower-than-expected first quarter as risks from the coronavirus recede.
Gross domestic product will expand 6% to 6.5% in 2022, Le Trung Hieu, head of the GDP department at the nation’s statistics office, said Tuesday. That would be the quickest pace in the region, and the second-fastest in Asia-Pacific after India’s estimated 7.5% pace, according to the Asian Development Bank.
Manufacturing will be the main driver, Hieu said, while tourism, construction and other industries are expected to extend their recoveries.
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While data Tuesday showed GDP in the three months to March grew at a slower-than-expected 5.03% pace from a year earlier, economic activity is seen gaining momentum in the remaining three quarters of the fiscal year, helped by increasing vaccination levels. The best case scenario is for growth to touch 6.5% should the Russia-Ukraine conflict be resolved, Hieu said.
“Vietnam’s economy was severely disrupted last year by the pandemic, but has started to normalize,” said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group in Singapore. “We expect growth to pick up at a faster pace from the second quarter.”
The benchmark Vietnam stocks index was trading 0.8% higher as of 11:48 a.m. local time, headed for its biggest advance in a week.
A stronger manufacturing performance is key to sustaining overall activity in Vietnam, where exports are a main driver of the economy. The nation’s parliament in January approved a stimulus package worth about 347 trillion dong ($15.2 billion) to see the economy through Covid-19 disruptions, and return growth to 6% to 6.5% this year.
Still, the war remains the biggest risk to the outlook, with geopolitical tensions seen adding to global supply strains on everything from food to fuel. Consumer prices rose 2.41% in March from a year earlier, the statistics office said, compared with the government’s target to cap average inflation at 4% this year.
“Inflation pressures are building up, fueled by rising oil prices that spurred costs in many sectors and industries,” Nguyen Thu Oanh, head of the inflation department at the General Statistics Office, said Tuesday, adding that government spending to aid virus-hit sectors will also add to inflation factors.
“The Covid-19 pandemic and rising prices of animal feed have greatly hurt agricultural production, which accounted 10.9% of GDP in this quarter,” Huong said.
Here are other key numbers from the statistics office Tuesday:
- Exports rose 14.8% in March compared to a year earlier, while Jan.-March shipments grew 12.9%
- Imports climbed 14.6% this month, helping notch up a 15.9% growth in the current quarter
- Total lending in Vietnam’s banking system climbed 4% through March 21 vs 1.5% a year earlier, while money supply increased 2.5%
By Nguyen Dieu Tu Uyen — With assistance by Nguyen Kieu Giang, Nguyen Xuan Quynh, and Chester Yung. Source: Bloomberg
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Source: Vietnam Insider