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Vietnam’s economy unexpectedly expands

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Manufacturing and processing was the driving force of the economy in the first six months with an expansion of 4.96 per cent. VIETNAM NEWS AGENCY/VIET NAM NEWS

Vietnam’s economy unexpectedly expands

Vietnam's gross domestic product (GDP) expanded 1.81 per cent year-on-year during the first half of this year, the lowest six-month growth pace since 2011, data from the General Statistics Office (GSO) show.

GSO deputy director-general Nguyen Thi Huong told a press conference on Monday: “As the government prioritised the fight against the Covid-19 pandemic over economic growth, a positive growth rate in January-June still indicates strong efforts of both the government and society to maintain business operations while combating the Covid-19 pandemic.”

The International Monetary Fund (IMF) slashed its 2020 world economic growth forecast further last week as the Covid-19 pandemic had greater damage to economic activity than initially predicted.

The IMF said it expected the global economy to recede by 4.9 per cent compared to a three per cent contraction previously forecast in April, adding that this prediction is much worse than during the 2008-2009 financial crisis.

The organisation also forecast sharp declines in GDP of large economies this year, with minus eight per cent for the US’ GDP, -10.2 per cent for Europe, -7.8 per cent for Germany and -12.5 per cent for France.

The fund, however, has forecast Vietnam’s economy to grow 2.7 per cent this year, the highest in Asia.

Huong said that amid the gloomy forecasts for global economic growth, the positive GDP result for Vietnam had shown the determination and efforts of the country’s whole political system in the fight against pandemic and its priority for people’s health and lives, even at the expense of economic benefits.

She said: “This is a solid foundation for the Vietnamese economy to sustain growth and avoid contraction. The data show all-level authorities, enterprises and people’s success in concurrently combating the pandemic, maintaining production and business activities, and gradually bringing the economy to the pre-pandemic status.”

GSO reported on Monday that in the second quarter, Vietnam’s GDP rose by just 0.36 per cent year-on-year, which was the lowest since quarterly records began in Vietnam 30 years ago, said System of National Accounts Department director Duong Manh Hung.

This was attributed to the economy being hit hardest by the Covid-19 pandemic in the second quarter, when the government ramped up social distancing measures, the GSO said.

It added that the agro-forestry-fisheries sector grew 1.72 per cent, industry-construction rose 1.38 per cent, while the services sector contracted 1.76 per cent between April and June.

In the January-June period, agriculture, forestry and fishery increased by 1.19 per cent (contributing 11.89 per cent to overall growth), industry and construction rose by 2.98 per cent (contributing 73.14 per cent) and the service sector climbed by 0.57 per cent (contributing 14.97 per cent).

Manufacturing and processing was the driving force of the economy in the first six months with an expansion of 4.96 per cent, along with wholesale and retail with a growth rate of 4.3 per cent, as well as finance, banking and insurance with 6.78 per cent.

Two months after the end of social distancing in Vietnam, economic activities have gradually returned to normal and led to a surge of 27.9 per cent month-on-month in new business formations to 13,700 in June, said the GSO.

June also witnessed a sharp month-on-month increase of 23.4 per cent in combined registered capital to 139.1 trillion dong ($5.97 billion). Employees recruited by new enterprises rose 9.4 per cent to 100,000.

However, the number of newly-established enterprises in the first six months was more than 62,000 with registered capital of a combined 697.1 trillion dong, down 7.3 per cent in number and 19 per cent in value year-on-year.

Average registered capital per newly-established enterprise was 11.2 billion dong during this period, down 12.5 per cent year-on-year.

The GSO noted that 25,200 enterprises resumed operations, up 16.4 per cent against the comparable period last year, bringing the total number of newly-registered and reinstated enterprises in the six-month period to 87,200, down 1.5 per cent year-on-year.

During this period, the number of enterprises that temporarily ceased operations surged 38.2 per cent year-on-year to 29,200.

The number of enterprises which completed procedures for bankruptcy fell five per cent to 7,400.

CPI rises 0.66%

Meanwhile, the country’s consumer prices in June climbed 0.66 per cent compared to May and up 3.17 per cent compared to the same period last year.

The GSO’s Huong said seven out of 11 key commodity and services groups posted increases, of which, transportation saw the highest increase as the prices of petroleum products climbed after a long losing streak since the Lunar New Year and the prices of pork continued to escalate in early June.

The Consumer Price Index (CPI) in the second quarter of this year fell 1.87 per cent compared to the previous quarter and surged 2.83 per cent compared to the same period last year.

In the first six months of this year, the average CPI jumped 4.19 per cent year-on-year. This is the highest level recorded from 2016 to 2020.

VIET NAM NEWS/ASIA NEWS NETWORK

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