Vietnam's economy accelerates despite dip in US exports, footwear drop
FILE PHOTO: Labourers work at a garment assembly line of Thanh Cong textile, garment, investment and trading company in Ho Chi Minh city, Vietnam July 9, 2019. Picture taken July 9, 2019. REUTERS/Yen Duong/File Photo/File Photo
HANOI :Vietnam's economy accelerated in the third quarter, despite a 20 per cent U.S. tariff in force since August 7 that is slowing Vietnamese exports to the United States, especially of footwear and textiles, government data showed on Monday.
Gross domestic product in the Southeast Asia nation rose 8.23 per cent in the July-September period from a year earlier, accelerating from an upwardly revised 8.19 per cent in the second quarter.
The acceleration supports the Vietnamese government's target of 8.3 per cent-8.5 per cent expansion this year, but appears at odds with forecasts from international organisations. The World Bank projects 6.6 per cent growth this year, while the International Monetary Fund estimates 6.5 per cent.
Growth was driven by foreign investment and rising exports, which continued to increase in the third quarter from a year earlier despite U.S. tariffs that took effect in early August.
However, monthly data showed a slowdown, with September exports down 1.7 per cent from August. Shipments to the United States, Vietnam's main market, fell 1.4 per cent compared to August, marking the second consecutive monthly drop, according to data from Vietnam's statistics agency.
FOOTWEAR EXPORTS TO US DOWN
Among industrial sectors that saw a drop in exports to the U.S., footwear was the hardest hit, recording a 27 per cent drop in September from August, data from the customs department showed.
Vietnam is home to large manufacturing operations of big footwear multinationals, including Nike, Adidas, and Puma, which produce a large part of their global output of shoes through suppliers in Vietnam.
Textile and garment exports to the United States fell 20 per cent, but rising shipments of coffee, chemicals and some electronics partly offset those losses.
Compared to a year earlier exports to the United States increased by 38 per cent. Total exports over the July-September period rose 18.4 per cent from a year earlier to $128.57 billion, while imports jumped 20.2 per cent to $119.66 billion, resulting in a trade surplus of $8.91 billion, the statistics office said.
Industrial production rose 9.1 per cent in the first nine months of this year from a year earlier, while foreign investment inflows rose 8.5 per cent on the year to $18.8 billion, the highest in five years.
TOURISM, LENDING, CONSUMERS SUPPORT GROWTH
Vietnam's stock market rose 2 per cent on Monday after the economic data was released.
Growth was helped by a booming tourism sector, with foreign arrivals to the country in the first nine months of this year up 21.5 per cent compared to the same period in 2024, for a total of 15.4 million.
A splurge in lending is also supporting economic expansion, with the central bank expecting credit to increase by 19 per cent to 20 per cent this year.
Retail sales increased 11.3 per cent, while consumer prices in September rose 3.38 per cent from a year earlier, below a target of 4.5 per cent to 5.0 per cent this year.
