A man paints steel structures of a new factory in Hanoi, Vietnam May 30, 2018. REUTERS/Kham/File Photo
HANOI – Vietnam’s economic growth slowed to 5.05 percent this year from an expansion of 8.02 percent last year, official data showed on Friday, weighed by weak global demand while public investment stalled amid an intensified anti-graft crackdown.
This year’s gross domestic product (GDP) growth is below a government target of 6.5 percent and lower than an average growth of 5.87 percent during the previous decade, according to the data released by the government’s General Statistics Office (GSO).
Vietnam is a regional manufacturing hub, which relies heavily on trade, but exports in 2023 fell 4.4 percent from last year, with shipments of smartphones, its largest foreign currency earner, dropping 8.3 percent, the GSO said in its report.
Industrial production index in 2023 rose 1.5 percent from last year, while average consumer prices in the year rose 3.25 percent, according to the GSO. Retail sales rose 9.6 percent.
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“Though this year’s growth is below a government target of 6.5 percent, it is still a positive result, putting Vietnam in the group of the fastest growing economies in the region and in the world,” the GSO said.
The country’s central bank, in an effort to boost economic growth, has this year cut its policy rates four times, reducing its refinance rate and discount rate by an accumulated 150 basis points each, but credit growth remains much weaker than its target of 14 percent.
Overall credit growth in the economy as of end-November was 8.2 percent, according to data from the State Bank of Vietnam, the country’s central bank, which said the “the economy was still facing difficulties with a slow economic recovery and therefore the demand for loans was weak.”
To compensate for the fall in exports, Vietnam has decided to extend a value added tax cut to boost domestic consumption, while the authorities have been seeking to speed up public investment, mostly on infrastructure.
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But public investment has stalled this year amid an intensification of the country’s “blazing furnace” anti-corruption campaign, that has often had the collateral effect of paralyzing activities.
Disbursement of public funds in the year to the end of November was estimated at 461 trillion dong ($18.98 billion), meeting only 65 percent of the target set for the year, according to the Ministry of Planning and Investment.
For the fourth quarter of this year, gross domestic product grew 6.72 percent from a year earlier, faster than an expansion of 5.33 percent in the third quarter and a growth of 5.92 percent in the same period last year, according to the GSO.
Vietnam’s legislature in November approved government targets for next year of GDP growth of 6 percent to 6.5 percent and inflation in a range of 4 percent to 4.5 percent.