Vietnam’s economy expanded faster than expected in the second quarter as it benefits from the trade war between China and the US.
GDP rose 6.7 per cent year on year in the second quarter after recording growth of 6.8 per cent in the first quarter, according to Hanoi’s General Statistics Office.
The GSO said Vietnamese growth might be reduced by a slowdown in public investment and an African swine fever outbreak that has hit farms in almost all Vietnam’s 63 provinces.
The agency said processing and manufacturing, which includes goods exporters, was the fastest growing sector, posting an increase of 9.1 per cent. Services output rose 6.9 per cent and agriculture 2.2 per cent.
Exports in the first half of the year rose 7.3 per cent from a year earlier to US$123 billion, while foreign direct investment increased 8 per cent to US$9.1 billion.
Vietnam has been Asean’s main beneficiary from the trade war between the world’s two largest economies, as manufacturers have moved production from China to avoid Donald Trump’s sanctions.
Imports from Vietnam to the US surged by an estimated 40 per cent year on year in the first four months of this year, while imports from China over the same period fell 13 per cent.
The Asian Development Bank forecast that Vietnam would gain up to a cumulative 2 per cent of GDP over three years if the trade war continues. Trump might be forced from office in January 2021.
The tycoon turned populist said on Wednesday that trade discussions were ongoing with Vietnam, adding that Hanoi treated the US even worse than China.
Vietnam said it was committed to free and fair trade with the US, following threats by Trump to impose tariffs on Vietnamese products.
Vietnam’s Foreign Ministry spokeswoman Le Thi Thu Hang said Vietnam wanted a mutually beneficial trading relationship.
“Vietnam seeks to further economic, trade and investment ties with the United States which promote freedom and fairness, based on mutual benefits,” Hang said.
“Vietnam has made efforts to improve the bilateral trade balance, and promotes the imports of US goods that Vietnam needs,” she added.
By contrast with Vietnamese growth, Singapore and Malaysia are suffering particularly steep falls in exports because of Trump’s trade war. It was reported last week that Singapore’s non-oil exports fell by the most in three years.
“Although weaker global demand is likely to remain a drag, Vietnam is emerging as a clear winner of the escalating trade war as US demand has shifted away from China towards alternative suppliers,” Capital Economics said.
“Comments by President Trump where he appeared to suggest that Vietnam could be next in line to face US tariffs are an obvious threat.
“We expect growth to remain strong, thanks in large part to a booming export sector.”
Vietnam might be the next target for Donald Trump. Picture credit: NeedPix