Vietnam defies Asia slowdown as economic growth holds above 6 percent

Ho Chi Minh City

Vietnam’s economy expanded more than 6 percent for a second year, defying a regional slowdown to remain one of the world’s best performers as manufacturing surged.

Key Points

Gross domestic product increased 6.68 percent in the fourth quarter from a year earlier, up from 6.56 percent in the previous three months, the General Statistics Office said in Hanoi Wednesday The economy grew 6.21 percent in 2016, compared with the median estimate of 6.3 percent in a Bloomberg survey

Big Picture

Vietnam ranks among the world’s fastest-growing economies as its exports remained resilient to a global trade slowdown that’s hurting Singapore and China. Companies setting up plants in the country, such as Samsung Electronics Co., are transforming the nation into a manufacturing hub for electronics goods, including smartphones. The Asian Development Bank forecast Vietnam’s economic growth at 6.3 percent in 2017.

Economist Takeaway

“Vietnam is in a sweet spot right now,” said Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc in Hong Kong. “Strong growth will persist in the next several years. It is continuing to gain market share in exports and even giving China a run for competitiveness. Foreign companies continue to invest in Vietnam to take advantage of its highly competitive labor and low cost. The outlook is bright and it is one of the standout economies in Asia.”

Market Reaction

Benchmark five-year government bonds dropped for the first time in a week, losing four basis points to 5.64 percent. The benchmark VN Index fell as much as 0.3 percent before closing 0.1 lower in Ho Chi Minh City trading

Other Details

Manufacturing gained 13.61 percent in the fourth quarter from a year earlier, fastest pace this year, Ha Quang Tuyen, head of GDP department at the GSO, said at a briefing on Wednesday Exports rose 8.6 percent in 2016, imports gained 4.6 percent, according to GSO Vietnam posted a trade deficit of USD300 million in December. It had a trade surplus of $2.68 billion for 2016 Retail sales rose 10.2 percent in 2016 Disbursed foreign direct investment climbed 9 percent to a record $15.8 billion this year. Pledged FDI increased 7.1 percent. Nguyen Dieu Tu Uyen, Bloomberg