Vietnam: Growth accelerates sharply amid a base effect in Q3
Preliminary data shows that GDP growth soared to 13.7% year on year in the third quarter, up from 7.8% in the second quarter, amid a base effect related to the large-scale lockdown in Q3 2021.
Looking at subsectors, the industry and construction subsector expanded by 12.9% in Q3, while the expansion in services was a whopping 18.9%. Within services, the lifting of Covid-19 restrictions and the strong tourism revival led to significant increases in the accommodation and food services, and retail and wholesale trade, subsectors. Lastly, agriculture grew more mildly, by 3.2%.
Looking ahead, quarterly yoy growth is set to slow sharply in Q4 as the base effect grows less favorable, before accelerating again slightly in 2023. While slowing global demand will be a drag on exports and recent monetary policy tightening poses a risk to domestic activity, a recovering tourism sector and the country’s attractiveness as a manufacturing base for foreign firms will support growth going forward.
On the outlook for the external sector, analysts from the EIU commented:
“EIU believes that a continuing expansion of export-oriented manufacturing will underpin economic growth in 2023, but downturns in major destination markets will limit the speed at which the economy expands, even as Vietnam continues to increase its share of global exports.”