Vietnam's economy grew 6.81 percent in the third quarter from a year earlier, accelerating from 6.47 percent in the previous quarter, the government said on Tuesday, fuelled by strong exports and manufacturing and record foreign direct investment. The economy expanded at its fastest pace this year, and growth in the first nine months was its highest since 2010, defying the chill from a slowdown in China and much of the rest of Asia.
Almost half of the January-September growth came from industry and construction, up 9.6 percent from the same period last year, the General Statistics Office said in a report. That was boosted by new infrastructure, a rebound in the property market and continued growth in manufacturing - mostly electronics and textiles - which has expanded for 24 successive months.
Retail and services grew 9.8 percent in January-September period, year-on-year. Growth in the communist country has been supported by solid foreign direct investment inflows that are also seen at a record high $9.65 billion in the first nine months. Vietnam has targeted 2015 growth at 6.2-6.5 percent, which would be the fastest since 2011.
That is in line with a 6.0-6.2 percent projection from the World Bank and 6.5 percent seen by the Asian Development Bank, contrasting with forecasts for bigger Southeast Asian markets that are struggling with weak exports and sluggish retail spending. Exports grew an estimated 10.3 percent in the third quarter from the same period last year, the report said. Vietnam "stands out as one of the few countries in the region that has shrugged off the global slowdown in trade," said Daniel Martin, an economist with Capital Economics.
"We expect it to remain a bright spot over the next few years," he said in a report on Tuesday. The government wants to lure foreign capital to boost local companies and position Vietnam as a low-cost manufacturing alternative to China for the likes of Samsung. That investment is being helped by integration into a common Southeast Asian market later this year, a free trade deal with the European Union and its expected accession to a US-led Trans-Pacific Partnership worth 40 percent of global GDP.
But Le Dang Doanh, an economist and former government adviser, said the growth story was lopsidedly foreign and warned that weaknesses of local firms could be exposed once Vietnam tries to integrate into global supply chains. "It (growth) is mainly coming from the manufacturing sector with foreign investment, not the actual growth of Vietnamese private firms," he said. "Vietnam's preparation for the upcoming integration is insufficient."