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Vietnam Puts 2016 Economic Growth at 6.2 Percent

  • Associated Press

FILE - workers operate at a transformer manufacturing workshop of Dong Anh Electrical Equipment Corporation-Joint Stock Company in Hanoi, Vietnam.

Vietnam's economy is forecast to grow 6.2 percent in 2016, helped by a manufacturing and building boom.

The General Statistics Office said Wednesday that this year's growth rate would be below 2015's rate of 6.7 percent but was still considered a success given unfavorable global trends and a spate of natural and environmental disasters.

The southern Mekong Delta, the country's main rice growing region, earlier this year suffered the worst drought and in turn saltwater intrusions in nearly a century. Toxic chemicals dumped into the sea in April by a steel complex in central Ha Tinh province, owned by a unit of Taiwan's Formosa Plastics Group, devastated the region's fishing and tourism industries.

Natural disasters caused 18.3 trillion dong ($813 million) worth of damage, the statistics office said.

Prime Minister Nguyen Xuan Phuc, in a meeting with other government officials, listed a trend toward protectionism and the unpredictable situation in the South China Sea, where China and other nations hold conflicting territorial claims, as challenges.

"This year, there was a big slowdown in mining and agriculture. The impact of natural disasters on farming caused GDP to fall by 1 percentage point," the online state-run newspaper Dan Tri quoted Phuc as saying. He said the Formosa Plastics disaster alone caused damage equal to 0.3 percentage point of GDP.

Construction, services

Vietnam's government routinely issues an estimate for GDP growth before the end of the year. A notice on the statistics office's website said industrial output and construction grew at a sizzling 7.6 percent pace, while services expanded at a 7 percent pace, accounting for a slightly larger share of the growth.

Exports rose 8.6 percent from the year before to $175.9 billion, while imports totaled $173.3 billion, it said.

The World Bank in a report this month said Vietnam's economy remained resilient, thanks to robust domestic demand and export-oriented manufacturing. It said Vietnam's medium-term outlook remained favorable, with GDP expected to expand by 6 percent this year.

But the country of 93 million has a ways to go in developing strong monetary and financial policies, leaving it vulnerable to global downturns.

Vietnam's manufacturing sector has gained in recent years from the country's participation in the Trans-Pacific Partnership, a trade pact led by the U.S.

President-elect Donald Trump's opposition to the plan poses a risk to the foreign investment that had been flooding into Vietnam in hopes of gaining preferential access for exports to the U.S. and other TPP markets such as Japan.

"Vietnam still has work to do to ensure macroeconomic health to weather potential shocks," Beatrice Tanjangco of Oxford Economics said in a recent report. "International trade has led Vietnam to prosper over the past few years, but it also made it more vulnerable to global risks."

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