Unlock Premium Data: Up to 50% Off InvestingProCLAIM SALE

Vietnam's economic surge: A testament to growth-boosting strategies

Published 29/06/2023, 03:46 pm

Investing.com - The Vietnamese economy has witnessed an upturn in growth for the first time in nine months, indicating that the government's strategies aimed at economic stimulation are starting to bear fruit.

In a recent report from the General Statistics Office, it was revealed that Vietnam's Gross Domestic Product (GDP) rose by 4.14% during the quarter ending June; this exceeded earlier projections of a modest rise of just 3.8%. Despite these positive figures, local markets responded with caution as the benchmark stocks index dipped slightly by 0.2%.

This unexpected surge can be attributed to several strategic actions taken by authorities such as interest rate cuts initiated by central banks - designed to encourage lending and consequently stimulate business activity and consumer spending within one of Southeast Asia’s rapidly growing economies.

Moreover, efforts were also made towards ensuring sustained growth through tax reductions on certain sectors and halving registration fees for locally manufactured cars until late 2023.

Government initiatives promoting domestic consumption alongside tourism-stimulating programs have been highlighted as key contributors toward this economic turnaround. Legislative steps like extending e-visa validity from one month to three months along with multiple entry options were approved recently aiming at boosting the tourism sector.

While there was some expansion seen in the first half ended June (at around 3.72%), it fell short when compared to pre-pandemic averages which hovered around a robust figure of approximately 5.7%. Nonetheless, authorities remain optimistic about achieving their target full-year growth set at an ambitious level of six-and-a-half percent.

In terms of specific sectors contributing significantly towards GDP growth, services emerged as a notable player expanding by over six percent in H1 while construction followed closely behind with nearly five percent expansion. However, manufacturing output showed only marginal improvement registering less than a half-percent increase signifying its struggle amidst difficult times marked notably by power shortages affecting northern parts particularly during Q2 leading many businesses on the verge of dissolution.

As exports play a significant role within Vietnam's economic structure – recovery within manufacturing is essential for overall stability and prosperity going forward despite prevailing external challenges predicted for the second half year according to Shivaan Tandon, economist of Capital Economics who hints possibility of further rate cuts from the State Bank of Vietnam.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.