Vietnam's galloping growth took a hit in the second quarter with drought and bad weather weighing on its agriculture sector and slowing the economy to 5.55 percent, the weakest expansion in the three-month period in two years.
Vietnam's economy is widely seen as among the most resilient in a turbulent Asia, but Tuesday's data showed it feeling the pinch from historic drought in its rice basket, seawater intrusion damaging soil and El Nino weather hurting coffee production. First-half growth cooled to an estimated 5.52 percent, from 6.32 percent in 2015, the government said.
The report by the General Statistics Office (GSO) was some rare bad news for what has been one of Asia's bright spots, buoyed by a construction boom and record foreign investment into a manufacturing sector set to capitalise on perks offered by new multilateral free trade deals.
Annual growth of 6.68 percent in 2015 was the fastest since 2007 and had been tipped to keep that pace, although government statisticians said unfavourable weather and a choppy global economy could start to weigh.
"World commodity prices remain low, trade and global investment lack excitement, the capital flows are declining, plus the unpredictable fluctuations of the world's financial and monetary markets have an impact," the GSO report said.
Crude oil export income from January-June fell 46.6 percent from a year ago to $1.13 billion, with output over the same period down 23 percent to an estimated 3.57 million tonnes, or 144,000 barrels per day.
Industrial output was still robust at 7.4 percent in June from a year earlier, although not as high as the 11.1 percent recorded at the same time in 2015. First-half industrial output growth was 7.5 percent, compared to 9.7 percent in 2015.
Manufacturing remains Vietnam's biggest draw, with firms like Samsung, LG and Panasonic using it as an assembly base for what will be tariff-free shipments to major markets, while textiles and shoe factories with lower wages than China are expanding to accommodate orders for high street fashion brands.
"It's temporary," GSO director Nguyen Bich Lam said of the weaker data. "The government will have a solution to boost agriculture, while the processing and manufacturing industries are still good."
The trade deficit in June shrank to an estimated $100 million from $180 million in May, while June coffee exports jumped 45.8 percent from a year ago, although El Nino in its coffee belt is expected to trim export volumes late in the year.
ANZ in a research note on Monday had anticipated the farm sector was dragging on growth, but predicted no change to the overall outlook.
"Vietnam remains the Asian economy that continues to withstand the multitude of global challenges that have culminated in Asia's 'trade recession' much better than its relative peers," it said.