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Vietnam’s 2023 economic growth slows to 5.05%

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Despite falling short of the government’s 6.5% target, this year’s economic growth places Vietnam among the fastest-growing economies in the region and globally.

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In November, Vietnam’s legislature approved targets for the upcoming year, including GDP growth set between 6% and 6.5% and an inflation target ranging from 4% to 4.5%. (Wikipedia pic)

HANOI:
Vietnam’s economic growth slowed to 5.05% this year from an expansion of 8.02% last year, official data showed today.

It was weighed by weak global demand while public investment stalled amid an intensified anti-graft crackdown.

This year’s gross domestic product (GDP) growth was below a government target of 6.5% and lower than average growth of 5.87% during the previous decade, according to the data released by the government’s General Statistics Office (GSO).

“Vietnam is a regional manufacturing hub that relies heavily on trade, but exports in 2023 fell 4.4% from last year to US$355.5 billion, with shipments of smartphones, its largest foreign currency earner, dropping 8.3%,” the GSO said in its report.

The report also stated that the industrial production index in 2023 rose 1.5% from last year, while average consumer prices in the year rose 3.25% and retail sales were up 9.6%.

“Though this year’s growth is below a government target of 6.5%, it is still a positive result, putting Vietnam in the group of the fastest growing economies in the region and the world,” the GSO said.

Imports in 2023 fell 8.9% to US$327.5 billion, resulting in a trade surplus of US$28 billion for the year, according to the report.

A large trade surplus is supportive of the dong currency, but a sharp fall in imports could indicate a slowdown in manufacturing activities in the months ahead.

In an effort to boost economic growth, the country’s central bank has cut its policy rates four times this year, reducing its refinance rate and discount rate by an accumulated 150 basis points each, but credit growth remains much weaker than its target of 14%.

Overall credit growth in the economy as of the end of November was 8.2%, according to data from the State Bank of Vietnam, the country’s central bank.

“The economy was still facing difficulties with a slow economic recovery and therefore the demand for loans was weak,” said the country’s central bank.

To compensate for the fall in exports, Vietnam has decided to extend a value-added tax cut to boost domestic consumption, while authorities have been seeking to speed up public investment, mostly in infrastructure.

But public investment has stalled this year amid an intensification of the country’s “blazing furnace” anti-corruption campaign, which has often paralysed activities.

Disbursement of public funds in the year to the end of November was estimated at 461 trillion dong (US$18.98 billion), meeting only 65% of the target set for the year, according to the planning and investment ministry.

“For the fourth quarter of this year, GDP grew 6.72% from a year earlier, faster than an expansion of 5.47% in the third quarter and a growth of 5.92% in the same period last year,” the GSO said adding that the third quarter GDP growth was revised up from 5.33%.

Vietnam’s legislature in November approved government targets for next year of GDP growth of 6% to 6.5% and inflation in a range of 4% to 4.5%.

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