HANOI - Vietnam’s economy grew at the fastest pace in Asia this year, signalling momentum just before risks from a global slowdown began to materialise.
Gross domestic product rose 8.02 per cent in the year to December, according to official data reported on Thursday. That was faster than the government’s initial target of 6 per cent to 6.5 per cent growth and was aided by a quicker-than-expected 5.92 per cent expansion in the final quarter.
Manufacturing, which grew 8.1 per cent during the year, was the main driver of economic growth, according to Ms Nguyen Thi Huong, head of Vietnam’s General Statistics Office. Strong improvement in services also supported growth.
The better-than-expected showing gives Vietnam’s central bank the space to wait and watch before deciding to pivot monetary policy away from tightening. While the authority has raised the benchmark rate by 200 basis points in two moves this year to 6 per cent, looming fears of debt default in Vietnam’s property sector have given reason for concern about a China-style growth hit.
While Vietnam “is performing well amid uncertainties in the global economy, risks to the economic outlook have become elevated”, the Asian Development Bank (ADB) said in a Dec 14 statement. “Though trade continues to expand, signs show weakening global demand for the country’s exports.”
ADB forecasts Vietnam’s 2023 growth to be 6.3 per cent as major trade partners see a slowdown.
The weakness was already evident in the headline trade data. Exports declined 14 per cent from a year ago in December, the second straight month of fall. Retail sales during the month rose 17.1 per cent, while credit growth improved 12.9 per cent.
That was accompanied by consumer price growth of 4.55 per cent from a year ago in December. Core inflation, which excludes prices of food, fuel, healthcare and education services, climbed at a faster rate of 4.99 per cent.
Vietnam will struggle to keep inflation in check in 2023, according to Mrs Bui Thuy Hang, deputy head of the central bank’s monetary policy department. The country will face consumer price increases, with inflation forecast at about 5 per cent in early 2023, higher than the government’s full-year target of 4.5 per cent, Mrs Hang told an economic forum on Dec 17.
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