HO CHI MINH CITY – Vietnam's economy grew by 7.4% in the third quarter compared to the same period last year, according to state data released on Sunday. This surpasses the 6.93% growth of the previous three months and far exceeds expectations despite the challenges following Typhoon Yagi, the strongest storm recorded in 70 years, which disrupted many business activities.
The gross domestic product (GDP) data, published by the General Statistics Office, marks the largest quarterly growth since the 13.7% surge in Q3 2022, following a strong recovery from the Covid-19 pandemic.
Exports led the way with a 15.8% increase since Q3 2023, although Typhoon Yagi caused many factories' activities to contract in September for the first time since March, according to S&P Global Market Intelligence.
Pre-announcement forecasts were modest, with Standard Chartered Bank predicting a 5.1% quarterly growth. Agriculture was hit the hardest by the storm, the General Statistics Office said, with growth slowing to 2.58% from 3.34% in the previous quarter.
Summer Le, chef and owner of Nén restaurant in Da Nang, said she was not directly affected by the storm but had to “struggle to waterproof” her restaurant each rainy season. “This year has been tough because of the economy,” Le shared.
The typhoon struck Vietnam on September 7, resulting in the deaths of hundreds of people and causing an estimated $3 billion.
“The impact will be seen through reduced output and damage to infrastructure across manufacturing, agriculture, and various services sectors,” according to a research note from UOB. “However, aside from these temporary disruptions, the long-term fundamentals remain solid.”
In the long run, the General Statistics Office reported that GDP rose by 6.82% in the first nine months of the year, approaching Vietnam's pre-Covid growth rate of 7.3%.
However, Vinacapital warned of challenges from the country’s biggest customer, the United States. They noted that the U.S. Federal Reserve’s interest rate cuts in September signaled that the U.S. economy would continue to slow, with a noticeable impact on orders from Vietnam.
“A slowing U.S. economy is likely to reduce American consumer demand for 'Made in Vietnam' products such as laptops, mobile phones, and other goods,” Vinacapital said in a research report. “Vietnam’s current GDP growth driven by exports may taper off next year, and the Fed’s moves essentially confirm this.”
The technology sector is expected to be a long-term driver of Vietnam's economy. Electronics exports increased by 20.6% in Q3 compared to the same period last year, according to the General Statistics Office. Vietnam is expanding its high-tech product supply chain, from BESI chip equipment to LG Electronics smartphone cameras.
“By expanding partnerships with reputable global partners in the semiconductor and artificial intelligence sectors, Vietnam is gradually realizing its motto: ‘If you want to go fast, go alone. If you want to go far, go together,’” Minister of Planning and Investment Nguyen Chi Dung said in a speech on Tuesday.
Nguồn: Nikkei Asia
