Vietnam's Q1 economic growth slowest in 3 years

The industrial sector and trade deficit have been dragging on the country's economic momentum.

Vietnam's economic growth slowed to an estimated annual rate of 5.1 percent in the first quarter of this year, the slowest in three years, with the industrial sector suffering from its smallest expansion since 2011, the government said on Wednesday.

The Southeast Asian nation has one of the world's fastest growing economies, expanding at around 6 percent annually from 2011-2015 after jumping 7 percent per year over the previous five years.

Last year, an El Nino-induced drought, an environmental disaster and unfavorable global economic conditions put a brake on Vietnam's gross domestic product (GDP) growth, holding at 6.21 percent, the first slowdown since 2012, placing it behind India, China and the Philippines in Asia.

GDP growth of 5.1 percent from January-March is the slowest pace to be recorded in the first quarter since 2014, when it rose 5.06 percent, based on government data.

"Pending issues such as quality of growth, productivity and low competitiveness remain the challenges to the growth target," the government's General Statistics Office said in its quarterly report.

The Vietnamese government has targeted GDP growth to accelerate by 6.7 percent this year.

The industrial sector grew by 3.85 percent in the first quarter from a year ago, the slowest since 2011, with mining decreasing 10 percent and manufacturing and processing also expanding at a slower pace than in the previous two years, the statistics office said.

From a consumption approach, a deficit in trade balance and services has cut 4.42 percentage points of GDP growth in the first quarter, the office said.

After a $1.15 billion surplus in January, the country's trade balance swung to a deficit of $2.04 billion in February and an estimated gap of $1.1 billion in March, leaving the first quarter's trade deficit at $1.9 billion.

Vietnam's annual inflation in March stood at an estimated 4.65 percent, the slowest pace since last November, the statistics office said.

However, a hike in health service and tuition fees, higher demand for food and fuel prices rising 35 percent in the first three months have triggered the country's consumer price index to jump on average 4.96 percent from a year ago, a four-year high, the office said.

Vietnam’s economy would expand at an average of 6.3 percent in the next three years, with all categories of demand buoyed by strong foreign direct investment and manufacturing exports, the World Bank has said.

In the long run, the world is going to see significant shifts in economic order over the next few decades, with Vietnam poised to make the biggest improvement of all, consulting firm PricewaterhouseCoopers said in early February.

By VnExpress