Vietnam records highest GDP growth in two years despite typhoon

Vietnam achieved its highest economic growth in two years during the quarter ending in September, driven by robust exports, industrial production, and an increase in foreign investment. This positive development comes despite the devastating impact of Typhoon Yagi, Asia’s strongest typhoon this year.

The General Statistics Office reported a 7.4% year-on-year growth in gross domestic product (GDP) for the third quarter, exceeding the revised 7.09% growth in the second quarter.

Vietnam, a key manufacturing hub for multinational corporations like Samsung Electronics and Apple suppliers Foxconn and Luxshare, continues to attract significant foreign investment. The statistics office highlighted a stabilising global economy, improved trade in goods, easing inflationary pressures, loosening financial conditions, and increasing labour supply.

Exports in September rose by 10.7% compared to the previous year, while industrial production saw a 10.8% increase. Foreign investment inflows for the first nine months of the year increased by 8.9% year-on-year, reaching US$17.3 billion.

However, Northern Vietnam is still recovering from the severe impact of Typhoon Yagi last month, which resulted in over 300 fatalities, power outages, and halted industrial production, causing an estimated property damage of US$3.3 billion.

S&P Global’s purchasing managers index (PMI) for Vietnam’s manufacturing sector dropped to 47.3 in September from 52.4 in August, marking the most significant decline since November last year. Director at S&P Global Market Intelligence, Andrew Harker remarked that the storm brought an end to a strong growth period.

“The storm brought an end to a period of strong growth in the sector… Heavy rain and flooding caused temporary business closures and delays to both supply chains and production lines.”

Vietnam aims to achieve GDP growth between 6.0% and 6.5% this year, with a target to keep inflation below 4.5%. Consumer prices in September increased by 2.63% from the previous year, while retail sales rose by 7.6%.

For the first nine months of the year, exports surged by 15.4% year-on-year to US$299.63 billion, and imports grew by 17.3% to US$278.84 billion, resulting in a trade surplus of US$20.79 billion.

The International Monetary Fund (IMF) recently forecasted Vietnam’s GDP growth at 6.1% for this year, while the Asian Development Bank (ADB) projected a 6.0% growth.

The IMF report stated that Vietnam’s growth this year is supported by continued strong external demand, resilient foreign direct investment, and accommodative policies.

Both the IMF and the ADB cautioned that geopolitical tensions and uncertainties could negatively impact external demand, which is crucial for Vietnam’s economic growth, reported Bangkok Post.