Vietnam’s economic growth accelerates after dong devaluation

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Vietnam’s economic growth quickened after the central bank devalued the dong for a second time this year in a bid to boost exports.
Gross domestic product rose 6.44 percent in the second quarter from a year earlier, quickening from a revised 6.08 percent pace in the previous three months, according to data released by the statistics office in Hanoi Friday. In the six months through June, the economy grew 6.28 percent, compared with a median estimate of 6.2 percent in a Bloomberg survey.
The central bank devalued the dong in May to maintain competitiveness after exports expanded at the slowest pace in the first four months of the year since 2010. The government is also betting that the most significant easing of business regulations in 25 years and an accelerated sale of shares in state-owned firms will boost the nation’s investment outlook.
“The dong devaluation has definitely helped exports and that drove economic growth,” Huynh The Du, academic director of the Fulbright Economics Teaching Program in Ho Chi Minh City, a partnership with the Harvard Kennedy School, said before the report. “Companies are doing better, as the business environment has improved.”
Exports increased 9.3 percent in the six months through June from the same period a year earlier, a separate release showed today. Imports climbed 17.7 percent in the same period.
The benchmark stock index fell 0.5 percent as of 2.32 p.m. local time. The dong was little changed.
Vietnam’s factory production increased to a record in May, the manufacturing purchasing managers’ index from Markit Economics showed. As the government cleans up bad debt at banks, lending has improved, a central bank official said this week.
At the same time, pledged foreign direct investment fell by a fifth in the first half of the year, data showed. The government is also struggling to reach its target to sell shares in 289 state companies this year, with shares in only 43 firms sold by the end of May, according to the finance ministry.
Vietnam typically releases GDP and trade data before the end of the period.

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