Vietnam: Weather woes dampened economic expansion in 2016
December 28, 2016
In 2016, Vietnam’s GDP growth decelerated from 2015’s increase. Severe weather conditions slashed agricultural output, dragging the 2016 result down. However, excluding agriculture, the economy grew healthily last year on the back of soaring manufacturing and a quickly growing service sector.
For 2016 as a whole, GDP grew 6.2%, according to data released by the General Statistics Office (GSO) of Vietnam, marginally overshooting FocusEconomics panelists’ forecast of 6.1% growth and marking a deceleration from 2015’s 6.7% rise.
Looking at a breakdown by sectors of national accounts, agricultural production expanded 1.4% in 2016, which marked a notable deceleration from 2.4% growth in 2015. However, the full-year result shows that the sector recovered well in H2 from the weather hardships such as a prolonged drought and salinization of the Mekong Delta in H1, when agricultural output had contracted sharply.
Growth in industry eased from a 9.6% increase in 2015 to a 7.6% rise last year. A severe contraction in mining and quarrying, caused by the drop in petroleum prices, partly offset double-digit growth in manufacturing and construction, the former of which benefited from robust foreign direct investment. The service sector accelerated from a 6.3% increase in 2015 to a 6.9% rise in 2016, supported by double-digit growth in tourist arrivals and a strong expansion in retail sales.
In Q4 2016, GDP expanded 6.7% over the same period of the previous year, slightly above the revised 6.6% expansion recorded in Q3 (previously reported: +6.4% year-on-year).
Although GDP in 2016 fell short of the government’s target of 6.7%, Vietnam’s economy remained one of the ASEAN region’s top performers.