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Vietnam 4Q GDP Growth Slows to 6.97% as Global Demand Wanes

Nguyen Dieu Tu Uyen

(Bloomberg) -- Vietnam’s economic growth slowed in the fourth quarter amid weakening global demand and U.S.-China trade tensions.

Gross domestic product rose 6.97% in the fourth quarter compared to a year earlier, down from a revised 7.48% in the third quarter, the General Statistics Office said Friday. That compared to the median estimate of 6.9% in a Bloomberg survey of six economists.

For the full year, the economy expanded 7.02%, beating the government’s 6.8% target.

Growth may slow a bit early next year, given the strong readings in 2019, said Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore.

“We’re coming from a higher base so it will be difficult” for Vietnam to keep up this pace, he said. “The real questions are around what 2020 will mean for Vietnam if U.S.-China trade relations stabilize.”

Key Insights

Exports for December rose 10.1% compared to a year earlier, while imports climbed 11%. For the full year, exports increased 8.1% and imports gained 7%Compared to the third quarter, exports contracted 4.6% in the fourth quarter, dragging down the quarter’s GDP figure, according to the General Statistics OfficePrime Minister Nguyen Xuan Phuc has asked the central bank to make sure sufficient money and credit are available in the economy, especially from year-end into early 2020“Trade disputes between major economies could undermine export momentum over the short term, while Vietnam’s economy remains susceptible to a further slowdown in the global economy through trade and investment channels,” the World Bank said in its economic report released Dec. 17

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Consumer prices rose 5.23% in December from a year earlier. The government aims to cap average inflation at 4% this yearManufacturing for the full year rose 11.3%Pledged foreign direct investment for 2019 rose 7.2%, while disbursed FDI increased 6.7%“Two aspects that are troubling would be how Vietnam is going to manage its capacity issues, which are knocking up against constraints as the economy continues to grow,” and whether the U.S. will show greater scrutiny of Vietnam’s “very large and growing trade imbalance,” Mizuho’s Varathan said

(Updates with analyst quotes in fifth and final paragraphs, FDI figures in penultimate paragraph)

--With assistance from Nguyen Kieu Giang, Nguyen Xuan Quynh, Mai Ngoc Chau, Natnicha Chuwiruch and Clarissa Batino.

To contact the reporter on this story: Nguyen Dieu Tu Uyen in Hanoi at uyen1@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, ;John Boudreau at jboudreau3@bloomberg.net, Michael S. Arnold, Michelle Jamrisko

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