Vietnam's economic growth accelerated to 5.83 percent in the first quarter from a year ago, buoyed by construction, tourism and banking services amid robust domestic demand.
Growth was almost twice as fast as the 3.14 percent expansion in the first quarter of 2009, according to figures released by the General Statistics Office in Hanoi Monday. Gross domestic product expanded 5.3 percent last year, after quickening to 6.9 percent in the fourth quarter.
"Growth will probably accelerate during the rest of this year," wrote Kevin Grice, a London-based senior international economist for Capital Economics. "Exports will likely make a bigger contribution given the depreciation of the dong at a time when just about every other currency in Asia is strengthening."
Domestic demand is supporting the economy as the government tries to stimulate exports after the global slowdown reduced demand for Vietnamese-made products.
"These figures are a good base for strong full-year growth," said Kevin Snowball, chief executive of PXP Vietnam Asset Management in Ho Chi Minh City. He said growth may reach as much as 7.5 percent for the full year if the global economy continues to improve.
Industry and construction accounted for 43 percent of the economy in the first quarter, expanding 5.65 percent from a year earlier. The gain was 1.7 percent in the same period last year.
Services grew 6.64 percent from a year earlier, making up 42 percent of GDP, after increasing 4.95 percent in the first quarter of 2009. The hotel and restaurant business advanced 7.82 percent as the number of foreign visitors to Vietnam jumped 36 percent in the first quarter from a year earlier. Financial services grew 7.86 percent and construction grew 7.13 percent.
"Much of the growth was generated domestically, since exports were still contracting in the first quarter," Tai Hui, Singapore-based head of Southeast Asian economic research at Standard Chartered Plc, wrote in a research note. "The government's 6.5 percent growth target is within reach, as exports are likely to improve gradually in 2010, becoming a more potent engine."
Vietnam has devalued its currency twice since November.
The GDP figures come amid signs of a regional recovery. In the past week, Malaysia raised its growth forecast, Japan reported the biggest export jump in 30 years and Taiwan said industrial production rose for a sixth month.
"We're seeing a two-track recovery with Asia forging ahead of the rest of the world, and Vietnam has consistently been one of Asia's fastest-growing economies," said Matt Robinson, a Sydney-based economist for Moody's Analytics Inc.
"Vietnam's growth model has been focused on low costs and abundant labor, and the evidence suggests that that model has been more resilient over the past 18 months, when many people put higher-end consumer discretionary expenditure on hold," Robinson said before the figures were released. Moody's Analytics, a unit of New York-based Moody's Corp., focuses on economic research and analysis.
Economic growth has been driven by foreign investment, a literate labor force and low-cost exports, according to research published last week by Daiwa Capital Markets, which cited construction as among the drivers of growth in recent years.
An increase in credit growth to as much as 38 percent last year has had a "lagged effect" on the Vietnamese economy, according to Australia & New Zealand Banking Group Ltd.