Vietnam’s GDP growth slows to 3.32% in Q1 amid global headwinds

Vietnam posted economic growth of 3.32% in the first quarter of 2023 compared to a year earlier, the General Statistics Office reported on Wednesday.

The first quarter’s performance comes amid current global economic headwinds, with the U.S. and European banking sectors facing a crisis of confidence, and significantly lower than the 5.92% growth rate reported in the last quarter of 2022.

The country, a regional manufacturing hub, reported an 11.9% year-on-year drop in exports to $79.17 billion in Q1 as global import orders are on the decline. Its total import spending was estimated at $75.1 billion, down 14.7%.

Industrial production in the first three months shrank by 0.82% from a year earlier, but total domestic retail sales of goods and services rose 13.9% to more than VND1,505 trillion ($64 billion).

Consumer prices in March fell 0.23% from February, the GSO said. Average consumer prices in the first quarter rose 4.18% from a year earlier.

Curbing inflation is a key task for the State Bank of Vietnam. On March 16, the SBV lowered its discount rate by 100 basis points to 3.5% from 4.5% to boost economic growth amid global uncertainties. The bank also reduced the overnight lending rate in the interbank market by 100 basis points to 6% and trimmed the cap on lending interest rates for short-term loans in some sectors to 5% from 5.5%.

Vietnam's economy is well on track to recovery and continued growth in 2023 following its success in controlling inflation and maintaining the relative stability of the Vietnamese dong last year, corporate representatives told the Vietnam Business Forum (VBF) on Sunday.

In mid-March, the World Bank said that Vietnam’s economic expansion might ease to 6.3% in 2023 from a robust 8% last year, reflecting domestic and external headwinds.

In its update for Q1/2023 released on Tuesday, Singapore's United Overseas Bank (UOB) kepts its 2023 economic growth forecast for Vietnam at 6.6%, in line with the Vietnamese government's target of 6.5%.

With last year’s 8.02% expansion, the highest in 12 years, Vietnam was one of Asia’s fastest-growing economies. However, the high growth rate in 2022 was partly derived from the low growth base in the pandemic years of 2020-2021, at 2.91% and 2.58% respectively.