Vietnam’s economic growth quickened this quarter as rising foreign investment helped support manufacturing and exports, countering weak lending from a banking industry burdened by bad debt.
Gross domestic product rose 5.54 percent in the third quarter from a year earlier, accelerating from a 5 percent gain in the previous three months, according to data released by the General Statistics Office in Hanoi today. In the nine months through September, the economy grew 5.14 percent, compared with the 5.1 percent median estimate in a Bloomberg survey.
Vietnam’s exports climbed 16 percent in the first nine months of the year from the same period a year earlier on sales of electronic items and mobile phones, while pledged foreign direct investment rose 20 percent in the first eight months, government data showed. Overseas demand is helping support an economy that’s been hurt by faltering credit growth, with Fitch Ratings estimating bank bad debt at about 15 percent of outstanding loans, the highest among six Southeast Asian countries it covers.
“Export-oriented production is still going along well, particularly in electronics,” said Adam McCarty, a Hanoi-based economist at Mekong Economics. “It’s the state-owned enterprises and the banking sector that keep growth from returning to past levels.”
Prime Minister Nguyen Tan Dung plans to complete a revamp of state enterprises by 2015 and has set up an asset management unit to resolve non-performing loans. The country’s bad debt is also among the highest in the Asia-Pacific region, said Alfred Chan, Singapore-based director of financial institutions at Fitch.
A Samsung Electronics Co. (005930) unit will start construction on a $1.2 billion chip and electronic components factory in Vietnam next month, the Saigon Times reported Sept. 11.
Vietnam in June devalued the dong for the first time since Dec. 2011, and the central bank has cut its refinancing rate eight times since the start of 2012. Still, credit grew 6.5 percent from Jan. 1 to the end of August, according to the monetary authority, lower than a full-year target of 12 percent.
Vietnam’s economy expanded 5.25 percent last year, the slowest pace since at least 2005, government data showed. The National Financial Supervisory Commission said last month GDP growth next year may be 5.6 percent to 5.8 percent.
Inflation (VNCPIYOY) in September was the slowest in more than a year, data showed earlier this week. The government aims to curb price gains at 7 percent annually from 2013 to 2015 and then below 5 percent, Vuong Dinh Hue, the Communist Party’s Central Economic Committee chief, said Sept. 23.