Vietnam's Q1 economic growth hits 2-year low at 5.1%

A Vietnamese worker welding in the body shop at the Ford automotive plant in the northern province of Hai Duong, on Jan 11, 2017.
A Vietnamese worker welding in the body shop at the Ford automotive plant in the northern province of Hai Duong, on Jan 11, 2017.PHOTO: AFP

HANOI (REUTERS) - Vietnam's economy grew at its slowest pace in three years in the first quarter, government data showed on Wednesday (March 29), as production was weak in agriculture, mining and manufacturing.

The General Statistics Office (GSO) said annual growth in January-March was 5.1 per cent. That was the slowest expansion for any quarter since the first three months of 2014.

Nguyen Bich Lam, head of GSO, said that if current trends are maintained, Vietnam is "unlikely to reach" its 2017 growth target of 6.7 per cent.

Vietnam has been among Asia's fastest growing economies, though in 2016, the economy slowed for the first time in four years, to 6.21 per cent from the previous year's 6.68 per cent pace.

The extension into 2017 of last year's drought and salination problems hurt agricultural output of Vietnam, a major exporter of rice and coffee.

In the first quarter, mining sector production dropped 10 per cent from the same period last year, the GSO said, amid the government's effort to steer away from natural resources, especially in coal, crude oil and gas.

Annual growth of manufacturing in the first quarter slipped to 8.3 per cent from 8.9 per cent one year earlier, due to falls in food processing and electronics, said Ha Quang Tuyen, head of the GSO's National Accounts Department.

Tuyen said electronics production fell 1 per cent in the first quarter from a year, partly due to problems South Korea's Samsung Electronics's experienced with its Note7 battery.

Samsung, Vietnam's biggest foreign investor, has invested billions of dollars in the Southeast Asian nation.

Lam of GSO said challenges facing Vietnam include low labour productivity, a continuing impact from drought and salination, inflation, and how the current economic structure is not facilitating stable growth.