Vietnam's gross domestic product grew 5.66 percent in the first quarter from a year earlier as exports boomed, government data showed, despite higher shipping costs due to turmoil in the Red Sea. Growth in the January-March quarter was faster than the expansion of 3.41 percent in the corresponding period last year but slower than the fourth-quarter growth of 6.72 percent. First-quarter numbers are generally lower because of festival holidays.
The Southeast Asian nation, a manufacturing hub and key exporter of smartphones, electronics and garments, is seeking to shore up business activities after missing last year's growth target on weak global demand and brief power shortages. It has set a target of 6.0 percent to 6.5 percent GDP growth this year. The manufacturing and construction sector grew 6.28 percent, while the services sector expanded 6.12 percent in the quarter from a year earlier, the General Statistics Office (GSO) said in a report.
Goods exports from Vietnam grew sharply in the quarter, despite Red Sea shipping disruptions caused by the Houthis' attacks, which official estimates show boosted costs by 55 percent to 73 percent for cargoes from the country. Goods exports in the quarter grew 17 percent from a year earlier to $93.06 billion, while imports were up 13.9 percent at $84.98 billion, resulting in a trade surplus of $8.08 billion. Shipments of electronics rose 30 percent from a year earlier, while smartphone exports increased 10 percent and garments 7.9 percent, the GSO said.
Industrial production in the quarter rose 5.7 percent from a year earlier, the GSO said, adding that March consumer prices rose 3.97 percent from a year earlier and retail sales in the January-March period rose 8.2 percent. Last week, Prime Minister Pham Minh Chinh reassured foreign investors there would be no repeat of last year's power shortages for their factories as Vietnam ramps up coal imports. Vietnam's electricity output in the first quarter grew 11.4 percent from a year earlier to 65.5 billion kWh, the GSO said.
Government adviser Can Van Luc said economic growth had picked up thanks in part to a strong recovery in demand that spurred manufacturing and exports. "The latest set of data shows that the country can meet its GDP growth target of 6.0 percent to 6.5 percent for this year", Luc, who is also an economist at the Bank for Investment and Development of Vietnam said. But the economy still faces external risks such as geopolitical tension, terrorism, Red Sea shipping disruptions and climate change, he added. "The government needs to make more progress in improving its business environment and address the current problems of the real estate and corporate bond markets", he added.