Vietnam's growth quickens in Q2, but Covid-19 outbreak raises risks

HANOI • Vietnam's economic growth accelerated in the second quarter, as a global recovery spurred robust exports and industrial production, but risks to the outlook have grown as the country battles its most serious Covid-19 outbreak so far.

Gross domestic product is estimated to have expanded 6.61 per cent in the second quarter from a year earlier, faster than a revised gain of 4.65 per cent in the first quarter, the government's General Statistics Office (GSO) said yesterday.

"Global trade continued to recover," the GSO said in a statement, adding that "domestically, macroeconomic stability has been maintained, while production and trade have seen decent results".

Vietnam has been one of the fastest growing economies in South-east Asia through the pandemic, though after successfully containing the virus for most of last year, it has been grappling with a rise in infections since April. The GSO said the outbreak is posing a threat to Vietnam's recovery, while some analysts warned that efforts to control the virus are already taking an economic toll.

"With sporadic outbreaks continuing, the economy is likely to suffer further in the months ahead," Capital Economics said in a note.

Vietnam's exports in the first half of this year rose 28.4 per cent from a year earlier to US$157.63 billion (S$211.67 billion), while industrial production increased 9.3 per cent, according to the GSO.

Since late April, the outbreak of coronavirus infections has accounted for more than three-quarters of the total 16,136 registered cases. So far, there have been 76 deaths.

The outbreak is "evolving in a complicated manner, challenging the management and administration to develop the economy and ensure social security", the GSO said.

The new outbreak, which forced global giants like Samsung Electronics and Foxconn to temporarily curb their production in northern Vietnam last month, is now spreading rapidly in the country's southern business hub Ho Chi Minh City and its neighbouring industrial provinces.

The industrial and construction sector in the April-June period grew 10.28 per cent from a year earlier, the GSO said. The service sector expanded 4.3 per cent, while the agricultural sector grew by 4.11 per cent. Vietnam's consumer prices in June rose 2.41 per cent from a year earlier and were up 1.62 per cent from December, the GSO said.

REUTERS

Growth in Vietnam's exports in the first half of this year, from a year earlier.

Increase in industrial production.