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Vietnam's GDP growth expands by 5.66% in Q1
Ngoc Mai 15:35, 2024/03/30
This represents the highest growth rate for the same three-month period compared to the years 2020 through 2023.

According to macroeconomic data released by the General Statistics Office (GSO) for the first three months, Vietnam's economy has shown robust growth in the first quarter, expanding by 5.66%. This marks the highest growth rate for the same three-month period compared to the years 2020-2023.

 Electronics production at Hoa Lac Hi-tech Park. Photo: Hai Linh/The Hanoi Times

Previously, various international organizations such as Standard Chartered and UOB Bank (Singapore) had forecast that Vietnam's Q1 economic growth could reach between 5.5% to 6.1%. Nguyen Thi Mai Hanh, head of the National Accounts Department, stated that the 5.66% growth rate is positive and aligns with the economic trends in the first three months.

"Although the GDP growth rate did not match that of the same period in 2018-2019, this represents a significant effort," she assessed. She noted that this achievement is remarkable given Vietnam's ongoing economic instability and the downturn in major economies.

Industry and construction sectors were the economy's main drivers, with a growth rate of 6.28%. Thanks to a policy of encouraging public investment, this sector contributed nearly 41.7% to the overall national growth.

Activities promoting tourism and trade have propelled the service sector to grow by 6.12% in the first quarter, contributing over 52.2% to the GDP. Meanwhile, the agriculture, forestry, and fisheries sectors have experienced a slower recovery, with a growth rate of 2.98%.

In terms of the economic structure in Q1, the agriculture, forestry, and fisheries sectors accounted for 11.8%; industry and construction accounted for 35.7%; while services accounted for 43.5%. This structure is similar to that of the same period last year.

According to GSO data, the Consumer Price Index (CPI) for the first three months of the year increased by 3.77% compared to the same period in 2023.

Import and export activity was also robust in the first quarter, reaching over $178 billion. This represents a 15.5% increase over the same period last year, with exports up by 17% and imports by nearly 14%. The trade balance remains in surplus, with Vietnam enjoying a trade surplus of $8.08 billion.

Despite the buoyant import-export activities, risks remain, with many domestic enterprises still facing difficulties and fierce competition in the domestic market. "While the service sector has seen high growth, it has yet to break through," added Hanh.

Domestic consumption is trending towards recovery, with total retail sales of goods and services in March estimated at VND509.3 trillion ($205 billion), up 0.5% from the previous month and 9.2% higher than the same period in 2023. Overall, domestic consumption in Q1 increased by 8.2% compared to the same period last year (5.1%, excluding price factors), reaching nearly VND 1,540 trillion ($62 billion).

Many sectors are experiencing recovery, but businesses still face challenges. According to the GSO, the number of companies that went out of business or ceased operations in the first quarter was higher than  That of enterprises that started up or resumed operations.

In Q1, there were over 36,200 newly established businesses nationwide, with a total registered capital of VND332.2 trillion ($13.4 billion). The number of businesses returning to operation also increased slightly by 2.4% compared to the same period in 2023, reaching over 23,600 units. This means that nearly 20,000 new businesses are established or resume operations every month.

However, the number of enterprise closures and liquidations continues to rise. On average, nearly 24,700 businesses exited the market each month, some  4,700 more than were newly born.

The results of the survey on business trends in the manufacturing and processing industries, which are the driving force of the economy, show that over 22% reported better production and business conditions compared to the last quarter of 2023.

Almost 43% of businesses perceive conditions to be stable, while the remainder report difficulties. The main reasons cited by companies for these challenges are low domestic market demand,  strong competition, and ongoing difficulties in accessing capital. However, current orders are more promising than in Q4 of last year, and the outlook is expected to improve in Q2.

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