Vietnam economy expands 5.66% in first quarter as exports boom

HANOI :Vietnam's gross domestic product grew 5.66 per cent in the first quarter from a year earlier as exports boomed, government data showed on Friday, despite higher shipping costs due to turmoil in the Red Sea.

Growth in the January-March quarter was faster than the expansion of 3.41 per cent in the corresponding period last year, but slower than the fourth-quarter growth of 6.72 per cent. First-quarter numbers are generally lower because of festival holidays.

The Southeast Asian nation, a manufacturing hub and key exporter of smartphones, electronics and garments, is seeking to shore up business activities after missing last year's growth target on weak global demand and brief power shortages.

It has set a target of 6.0 per cent to 6.5 per cent GDP growth this year.

The manufacturing and construction sector grew 6.28 per cent, while the services sector expanded 6.12 per cent in the quarter from a year earlier, the General Statistics Office (GSO) said in a report.

Goods exports from Vietnam grew sharply in the quarter, despite Red Sea shipping disruptions caused by the Houthis' attacks, which official estimates show boosted costs by 55 per cent to 73 per cent for cargoes from the country.

Goods exports in the quarter grew 17 per cent from a year earlier to $93.06 billion, while imports were up 13.9 per cent at $84.98 billion, resulting in a trade surplus of $8.08 billion.

Shipments of electronics rose 30 per cent from a year earlier, while smartphone exports increased 10 per cent and garments 7.9 per cent, the GSO said.

Industrial production in the quarter rose 5.7 per cent from a year earlier, the GSO said, adding that March consumer prices rose 3.97 per cent from a year earlier and retail sales in the January-March period rose 8.2 per cent.

Last week, Prime Minister Pham Minh Chinh reassured foreign investors there would be no repeat of last year's power shortages for their factories, as Vietnam ramps up coal imports.

Vietnam's electricity output in the first quarter grew 11.4 per cent from a year earlier to 65.5 billion kWh, the GSO said.

Government adviser Can Van Luc said economic growth had picked up thanks in part to a strong recovery in demand that spurred manufacturing and exports.

"The latest set of data shows that the country can meet its GDP growth target of 6.0 per cent to 6.5 per cent for this year," Luc, who is also an economist at the Bank for Investment and Development of Vietnam, told Reuters.

But the economy still faces external risks such as geopolitical tension, terrorism, Red Sea shipping disruptions and climate change, he added.

"The government needs to make more progress in improving its business environment and address the current problems of the real estate and corporate bond markets," he said.