Vietnam economy grows at fastest pace in five years

HANOI – Vietnam reported that its economy grew 6.68 percent in 2015, the fastest pace in five years, helped by an expanding industrial sector and record foreign direct investment.

The annual growth rate exceeds a 6.55 percent forecast by Prime Minister Nguyen Tan Dung early this month and the official target of 6.2 percent, the government said on Saturday.

In the fourth quarter, gross domestic product (GDP) increased 7.01 percent from a year earlier, accelerating from 6.87 percent in July-September to be the year’s best quarter, the General Statistics Office (GSO) said in a report.

farmer harvests

The Southeast Asian nation’s growth rate has been rising every year since 2012 as the country made reforms after being on the brink of a crisis after a property bubble burst and bad debts soared to reach 17.5 percent of total loans. The 2015 rate “is an achievement of a five-year period but not a result of efforts of a single year,” Nguyen Bich Lam, GSO head, told a media conference.

The GSO said growth has been supported by 9.4 annual percent growth in manufacturing and expansion of 10.8 percent, the highest in five years, for construction. As of Dec. 15, actual foreign direct investment (FDI) this year was $14.5 billion, or 17.4 percent above the year-earlier figure.

A missed target

One weakness in 2015 was exports, which failed to hit the target for 10 percent growth on falling global commodities prices including crude oil and coffee. Shipments have increased 8.1 percent, to $162.4 billion, while imports increased 12 percent from last year to $165.6 billion, the GSO report showed.


That left Vietnam with its first annual trade deficit since 2011, estimated at $3.17 billion.

“Our economy is very exposed and based much on exports, so the government will have to focus on making suitable policies for the coming time,” GSO’s Lam said, referring to rising global competition Vietnam faces for exports.

The communist nation is seen as one of the biggest winners from the Trans-Pacific Partnership (TPP) covering 40 percent of global GDP, but experts have warned that its growth could be unstable if domestic businesses fail to catch up.

The country has completed negotiations for 12 free trade deals, including ones with the European Union, South Korea and the Russian-led Eurasian Economic Union. The government has projected economic growth of 6.7 percent for next year.