ANZ economists sceptical of VN growth data

Thursday, Oct 16, 2014 17:28

Ford Viet Nam workers control machines. Viet Nam's economic growth was higher than expected this year, but economic indicators are pointing to a weaker growth rate. — Photo

HA NOI (Biz Hub) ─ ANZ Bank economists said that they are sceptical of data showing Viet Nam's economic growth at 5.62 per cent in the first nine months of this year, which is higher than expected.

In a report dated October 14, they said that while the growth rate is higher than the 5.1 per cent growth during the same period last year, most economic indicators in the country are pointing to a weaker growth rate.

Domestic consumption remains sluggish with public spending on infrastructure failing to prop up local demand. Private and public consumption accounts for more than 70 per cent of the total economic activity, weighing down growth from the robust external sector.

Retail sales rose 11.05 per cent year-on-year, in the first nine months, lower than the 12.78 per cent corresponding increase over the same period last year.

Inflation in September slid to 3.62 per cent year-on-year, well below the market expectations of 4.2 per cent, taking the nine-month average inflation to 4.61 per cent year on year, which is an indicator of persistent weak local demand.

Industrial production is expanding slower than the expansion over the same period last year, with the nine-month growth averaging 6.96 per cent year on year, versus 7.87 per cent in 2013.

The total value of newly registered foreign direct investment (FDI) capital and additional funding reached US$11.18 billion as of September 20. At this rate, it is not likely to match the $20 billion funding in 2013.

ANZ economists, however, said that the government is keeping a firm control on its finance, and credit growth will likely accelerate through the fourth quarter. Strong FDI flows pouring into manufacturing will keep the outlook on exports promising, they added.

"We maintain our forecast for 2014 growth at 5.6 per cent and see steady, yet slow, improvement to 5.8 per cent in 2015," the economists said. ─ VNS

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