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Vietnam GDP Q3 2023

Vietnam: GDP growth records best reading since Q4 2022 in Q3

GDP growth picked up to 5.3% year on year in the third quarter, from 4.1% in the second quarter.

Q3’s reading marked the best result since Q4 2022, and was likely well above the ASEAN average. That said, the reading was still muted compared to pre-pandemic growth, and means Vietnam is set to miss the government’s 6.5% growth target for the year.

The acceleration was driven by an improvement in industrial production to 5.2% year-on-year growth in the third quarter (Q2: +2.1% yoy). The expansion in services was unchanged at 6.2% in Q3 (Q2: +6.2% yoy), buoyed by the more than doubling of visitor arrrivals. Meanwhile, agricultural output growth was unchanged at 3.7% in Q3.

Our analysts expect a further acceleration in annual GDP growth in Q4, which will be at least partly due to a favorable base of comparison. The Central Bank’s interest rate cuts in recent months should also provide support.

On the reading and outlook, United Overseas Bank’s Suan Teck Kin said: “The latest data showed some encouraging signs that activities may have turned around as exports expanded in Sep after 6 consecutive months of declines while manufacturing output recorded its fourth consecutive month of y/y increases. Despite the uncertain outlook, foreign enterprises continued to commit to the country in the current wave of de-globalisation, de-risking, and supply chains shifts. Despite firmer growth in 3Q23, the drag from the first 6 months of the year remains significant. As such, we are adjusting lower Vietnam’s full year growth forecast to 5.0%.”

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