Vietnam’s economic growth accelerated in the fourth quarter as banks increased lending and rising foreign investment boosted exports.
Gross domestic product rose 6.96 percent in the fourth quarter from a year earlier, quickening from a revised 6.07 percent gain in the three months through September, according to data released by the General Statistics Office in Hanoi today. For the full year, the economy grew 5.98 percent, beating the government’s 5.8 percent target and compared with a median estimate of 5.7 percent in a Bloomberg survey.
Vietnam’s central bank lowered the dong deposit rate cap for some terms in October, and has cut other rates and devalued the dong this year in a bid to help businesses. Exports from overseas companies in the country increased 15 percent this year as disbursed foreign direct investment rose 7 percent, data showed yesterday.
“The growth is being supported by exports, mainly from foreign companies,” Tran Dinh Thien, director of the Vietnam Institute of Economics in Hanoi, said before the release. “Signs of economic improvement are getting clearer, but the growth is still fragile.”
The government has taken steps to overhaul the financial system and boost lending, with credit growth rising 12.6 percent as of Dec. 22. Meanwhile, falling oil prices have helped ease inflation, and the central bank said this week it aims to maintain the dong’s stability next year and pursue “flexible” monetary policies to boost expansion and curb price gains.
Vietnam typically releases GDP data before the end of the stated period, weeks before other countries do. Some analysts have questioned the third-quarter data, with Glenn Maguire and Eugenia Fabon Victorino at Australia & New Zealand Banking Group Ltd. saying they were “skeptical of the strong growth print, as most economic indicators are pointing to weaker growth data.”
Exports grew 13.6 percent this year as manufacturers including Samsung Electronics Co. and LG Electronics Inc. boosted investment. Shipments from FDI companies, including crude oil, reached $101.6 billion this year, or 68 percent of the total, data from the Foreign Investment Agency showed yesterday.
Inflation eased to 1.84 percent in December from a year earlier, the slowest pace since at least 2006. The government has ordered fuel retailers to cut tariffs and asked industries to stabilize prices before and during the Lunar New Year holiday in February.
Retail sales grew 10.6 percent this year from 2013, today’s data showed. Services rose 10 percent, while manufacturing expanded 8.45 percent.
“The economy has improved as businesses are getting better,” Nguyen Bich Lam, head of the GSO, said in a briefing. “The economy will continue to improve in 2015 as manufacturing, services and construction strengthen further.”
Fitch Ratings and Moody’s Investors Service raised Vietnam’s credit rating this year, citing improved economic stability, with Moody’s also revising its outlook on the country’s banking system this month to stable from negative.