Vietnam’s GDP has expanded by 5.66% in the first quarter (January – March) as compared to the same period in 2023.
This marks the highest growth rate since 2020, according to data released by the General Statistics Office (GSO on Friday. This can be attributed to a multitude of factors, strong performance in manufacturing and exports being the major one, despite challenges such as higher shipping costs. The economy does seek to increase business activity after weak global demand and power shortages in 2023.
This growth rate is higher than the 3.41% recorded in the first quarter of 2023 but lower than the 6.72% recorded the fourth quarter. However, first quarter numbers do tend to be lower due to festivals holidays.
Sector-Wise Developments
Some of the primary reasons for high rates of growth in the first quarter are a significant increase in the manufacturing and construction sector (6.28%) and the recovery of the services sector (6.12%). Exports, particularly of electronics, phones and clothing, surged by 17% to $93.06 billion despite a surge in global shipping costs due to the Red Sea Crisis. The economy also reported a growth of 13.9% in imports, and hence a trade surplus of %8.08 billion in the first quarter. The manufacturing and construction sector has contributed nearly 41.7% to the overall growth rate of the economy, presumably helped by measures taken to increase public investment.
The agriculture, forestry and fishery sector grew at a slower pace of 2.98%.
Overall, total turnover for Vietnam exceeded $178 billion, reflecting a 15.5% increase year-on-year.
Goals and Challenges for the Vietnamese economy
Vietnam has nearly doubled its coal imports this year in order to assure foreign investors that factories won’t see power outages like the previous year again. Prime Minister Phạm Minh Chính stated so in a recent meeting with investors.
Vietnam’s target GDP growth rate for this year is 6% to 6.5%, which government advisor Can Van Luc stated is achievable considering the latest set of data.
The economy does face challenges. External factors such as geopolitical tensions, terrorism, climate change and disrupted global supply chains are a subject of concern. The aforementioned Red Sea Crisis is a prime example of such challenges. Internally, the Vietnamese government has to address concerns regarding real estate and corporate bonds to ensure a stable business environment. It remains to be seen whether the promising rate of growth in the first quarter can be sustained through the year.
