Vietnam growth holds above 6 pct, aided by manufacturing gains

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A man on a bicycle rides past the State Bank of Vietnam in Hanoi, Photo credit: Bloomberg A man on a bicycle rides past the State Bank of Vietnam in Hanoi, Photo credit: Bloomberg

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Vietnam’s growth held above 6 percent in the first quarter as manufacturing supported an economy that’s still grappling with an overhang of bad debt.
Gross domestic product rose 6.03 percent in the first three months from the same period a year earlier, the General Statistics Office said in a release in Hanoi Thursday. That compares with a previously reported 6.96 percent pace in the last quarter of 2014 and the median estimate of 5.7 percent in a Bloomberg survey of eight economists.
Vietnam is trying to quicken a state share-sale program that began in the 1990s, as the government seeks to spur economic growth to a four-year high of 6.2 percent this year. Prime Minister Nguyen Tan Dung has also asked banks to lower borrowing costs to aid businesses and bolster expansion.
“Growth is supported by strong increase in industrial production,” Tran Dinh Thien, director of the Vietnam Institute of Economics in Hanoi, said by telephone. “Companies have imported more materials for manufacturing as borrowing costs from banks is at a low level.’
Vietnam typically releases GDP data before the end of the stated period, weeks before other countries do.
The country’s dong weakened 0.1 percent to 21,515 a dollar as of 4:10 p.m. local time. The benchmark VN Index of stocks fell 0.9 percent. The economic report came after the market close.
Share sales
Vietnam has sold 49.5 million shares in state companies this year, or about 59 percent of the total offered since the start of 2015, according to data from the stock exchanges. The complexities of the privatization process have hindered plans to overhaul inefficient state companies, whose borrowings have burdened the banking system and strained lending.
Business closures rose 14 percent in the first quarter from a year earlier, according to the planning and investment ministry. The central bank devalued the dong for a second time in seven months in January to boost exports, while refraining from joining a global wave of monetary policy easing this year.
Vietnam’s banking system and state enterprises ‘‘continue to pose risks to the economy,” and higher growth rates depend on the ability to undertake deeper structural and corporate governance reform, the Asian Development Bank said this week. It raised the nation’s GDP growth forecast for this year to 6.1 percent from 5.7 percent, citing rising exports and foreign direct investment.
Industry, which accounted for about 30 percent of GDP, grew 9.01 percent in the first quarter from the same period a year earlier, data showed today. Services expanded 5.82 percent.

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