Vietnam’s economy grew at a slower pace than economists estimated in the first quarter as industrial output eased and Samsung Electronics Co. cut production of smartphones.
Vietnam outperformed most of its Southeast Asian peers last year as export growth remained resilient. The economy has become a manufacturing hub for companies such as Samsung, which is Vietnam’s biggest exporter, accounting for about 20 percent of the nation’s shipments. Samsung took the dramatic step in October to end production of its Galaxy Note 7 smartphone, a decision that businesses said at the time would hurt the economy.
Global trade risks are also mounting, with Vietnam among the countries in Asia being most vulnerable to a rise in protectionism in the U.S.
The government is increasing spending on infrastructure to retain its role as a top investment destination in Southeast Asia as others like the Philippines catches up. The World Bank forecasts Vietnam’s economy will expand more than 6 percent this year and next, among the fastests in the world.
Nguyen Bich Lam, head of General Statistics Office, told reporters “5.1 percent growth for this quarter is slower than the pace at the same time in previous years and there are signs showing that it will very challenging for Vietnam to meet the government’s 6.7 percent full-year target”.
“The upshot is that we expect GDP growth in Vietnam to accelerate in 2017,” Gareth Leather, a senior Asia economist at Capital Economics Ltd. in London, said in a report. “There are some factors that should help to support growth this year,” he said, citing a recovery in agricultural output, loose monetary conditions and a strong export sector.
-Compiled by VietnamCredit-