Jun 29, 2021 / 18:31

Vietnam’s GDP expands 5.64% in H1

The current Covid-19 situation is threatening Vietnam’s efforts of realizing the twin goal of boosting economic growth along with putting the pandemic under control.

Vietnam’s GDP growth in the first half of 2021 is estimated at 5.64%, triple the economic growth rate of 1.82% in the same period of last year, according to the General Statistics Office (GSO).

While the rate was lower than the growth rates of 7.05% and 6.77% for the January-June period in 2018 and 2019, respectively, it was around the level of the 2016-2017 period – before the Covid-19 struck, stated GSO’s Director Nguyen Thi Huong in a press conference held today [June 29].

 Chart: Nguyen Tung

In the second quarter, Vietnam posted economic growth of 6.61% year-on-year, significantly higher than the 0.39% rate of the same period last year, and nearly the 6.73% recorded in the second quarter of 2018-2019.

“Covid-19 resurgence in certain provinces/cities has put at greater risks the Government’s efforts in pursuing the twin goal,” added Huong, stating the positive growth rate during the six-month period was down to drastic government’s measures and positive responses from the public and business community in fighting the pandemic.

In the January-June period, the agro-forestry-fishery sector expanded by 3.82%, contributing 8.17 percentage points to the overall growth; the industry and construction sectors posted 8.36% growth, contributing 59.05 percentage points; and services by 3.96% or a contribution of 32.78 percentage points.

The industry sector remained a main growth driving force for the economy in the first six months by posting a 9% growth, around the pre-Covid-19 level of 9.13% in 2019.

According to the GSO, the hospitality services and transportation sector continued to face difficulties as cities/provinces are still adopting social distancing orders to contain the pandemic. This resulted in the growth of the services sector among the lowest in the 2011-2021 period.

In the services sector, wholesale and retail were the largest contribution to growth, with an expansion rate of 5.63%.

This year the National Assembly set the country’s growth target at 6%, while the government expects the rate at 6.5%.

 Production at Katolec Vietnam in Quang Minh Industrial Park, Hanoi. Photo: Pham Hung

Covid-19 impacts remain severe

The GSO Head noted severe impacts from the Covid-19 pandemic have inflicted damages on business operation and trading activities in the first six months.

Vietnam posted a trade turnover of US$316.73 billion during the period, up 32.2% year-on-year, in which exports rose by 28.4% to US$157.63 billion, and imports of US$159.1 billion, up 36.1%.

“As a result, the trade balance stayed negative with a deficit of US$1.47 billion,” Huong said.

Referring to the consumer price index (CPI), a gauge for inflation, Huong said rising prices of input materials in line with prices on the global market, along with growing consumer demand for electricity and water are the main factors contributing to the higher inflation rate.

For the six-month period, the CPI grew by 1.47% year-on-year but remained the lowest growth rate since 2016.

Huong also referred to the labor market as it has been hit hard by the pandemic. The unemployment rate in the first half of 2021 reached 2.3% year-on-year, while Vietnam currently has 49.9 million workers from 15 years of age and above.

“Vietnam will likely see a strong pick-up in growth over the second half of the year. Despite the recent rise in COVID-19 cases, local demand should remain resilient. Meanwhile, foreign direct investment and exports are expected to pick up steam. Altogether, we have a forecast of 6.1% GDP growth Vietnam, although a strong end to the year could see annual growth come in even stronger,” Frederic Neumann, Co-Head of HSBC’s Asian Economics Research told The Hanoi Times.

Despite the Covid-19 situation, the United Overseas Bank in its latest report on June 25 predicted Vietnam’s GDP growth to reach 6.7%.