Vietnam’s economic growth accelerated in the third quarter as rising foreign investment boosted manufacturing and exports, helping counter slower lending by banks.
Gross domestic product rose 6.19 percent in the third quarter from a year earlier, quickening from a revised 5.42 percent gain reported in the previous three months, according to data released by the General Statistics Office in Hanoi today. In the nine months through September, the economy grew 5.62 percent, compared with a median estimate of 5.4 percent in a Bloomberg survey.
The government has increased efforts to clean up bad debt at banks and spur lending to businesses, while the central bank has cut interest rates and devalued the dong this year. The Asian Development Bank yesterday lowered its forecast for GDP growth this year to 5.5 percent for a seventh straight year of expansion below 7 percent, the longest such stretch according to International Monetary Fund records going back to the 1980s.
“It’s exports, especially those from foreign companies, that helped quicken growth this quarter,” said Tran Dinh Thien, director of the Vietnam Institute of Economics in Hanoi. “Manufacturing is picking up, but slowly, since local companies are still struggling. We need more government actions to help domestic businesses.”
Vietnam typically releases GDP data before the end of the quarter. The planning ministry earlier said GDP grew 5.54 percent in the nine months through September from a year ago.
The benchmark VN Index was little changed at the close today. It has gained about 20 percent so far this year. The dong was little changed at 21,215 against the U.S. dollar.
Exports rose 14.1 percent in the first nine months from a year earlier, while imports climbed 11.1 percent, today’s data showed. The government forecasts overseas sales to increase 12 percent this year.
Disbursed foreign investment rose 3.2 percent to $8.9 billion in the first nine months, with South Korea, Hong Kong and Japan the top investors, data showed earlier this week. Manufacturers including Samsung Electronics Co., LG Electronics Inc., Nokia Oyj and Intel Corp. have set up operations in Vietnam in recent years as they looked for options to China.
Vietnam’s credit growth rose 5.82 percent as of end-August, compared to 6.44 percent in the same period last year, and staying below a full-year target of 12 percent to 14 percent. A lack of trust between firms and banks contributed to slow lending, Governor Nguyen Van Binh said this week.
The ratio of bad debt at banks rose to 4.17 percent as of end-June, according to the monetary authority. It may be “substantially higher” because of a lack of consistent classifications and reporting standards for banks, Standard & Poor’s said in a report earlier this year.
Manufacturing gained 8.6 percent in the nine months through September from a year earlier, today’s data showed. Industry and construction increased 6.4 percent, while services climbed 6 percent.