Vietnam’s Economy Grows the Fastest Since 2011

Posted by Written by Koushan Das Reading Time: 3 minutes

Driven by the growth in exports, domestic demand, foreign investment, and the manufacturing sector, Vietnam’s GDP grew by 7.08 percent in 2018, the fastest in the last decade.

Major sectors

Agriculture-forestry-fishery

The agri-forestry-fishery sector grew by 3.76 percent in 2018, accounting for 8.7 percent of the total growth. The fisheries sector grew the fastest at 6.46 percent, while the agriculture sector witnessed the slowest growth at 2.89 percent. The forestry sector went up 6.01 percent.

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Industry and construction

The industry-construction sector grew at 8.85 percent, contributing 48.6 percent to the total growth.

The manufacturing and processing sector witnessed the highest growth at 12.98 percent, which was lower than 2017, but higher compared to the 2012-2016 growth rates.  

The construction sector grew at 9.16 percent, while the mining sector continued its negative growth in 2018, slowing down by 3.11 percent.

Services

In 2018, the services sector grew at 7.03 percent, lower than the 2017 growth rate of 7.44 percent. Within the services sector, the wholesale and retail sales segment grew the fastest at 8.51 percent, followed by financial, banking, and insurance activities at 8.21 percent.

Other segments such as accommodation and catering services, transportation and storage, and real estate grew by 6.78, 7.85, and 4.33 percent respectively in 2018.

Economy structure

Services sector continue to lead at 41.17 percent, followed by the industry-construction sector at 34.28 percent, and the agriculture-forestry-fishery at 14.57 percent.

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Trade

Export of goods and services grew by 14.27 percent, while imports went up by 12.81 percent in 2018.

Goods

Export turnovers in 2018 grew by 13.8 percent compared to 2017, to US$ 244.72 billion. Exports of the domestic sector grew by 15.9 percent, accounting for US$69.2 billion, while the FDI sector (including crude oil) grew by 12.9 percent, accounting for US$175.52 billion.

Import turnovers reached US$237.5 billion in 2018, growing by 11.5 percent compared to 2017. Imports of the domestic sector grew by 11.3 percent to US$94.8 billion, while the FDI sector’s reached US$142.71 billion, up 11.6 percent.

Overall the trade surplus was US$7.2 billion last year, with the domestic sector having a deficit of US$25.6 billion, while the FDI sector posted a surplus of US$32.8 billion.

Services

In the services sector, export turnover in 2018 reached US$14.8 billion, growing by 13.2 percent compared to 2017, with travel and transportation services accounting for 68.1 percent and 19.5 percent respectively of the total turnover.

Import turnover grew by 8.1 percent, to US$18.5 billion, with transportation and travel services accounting for 47.8 percent and 31 percent respectively of the total import turnover.

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FDI

In 2018, registered capital reduced by 13.9 percent to US$25.57 billion, but disbursed capital reached US$19.1 billion, up 9.1 percent compared to 2017.

Hanoi, Ba Ria-Vung Tau, Binh Duong, Dong Nai, and Ho Chi Minh City led amongst all the cities and provinces in terms of registered capital.

Per capita GDP

The per capita GDP in 2018 was estimated at VND 58.5 million (US$2,587), growing by US$198 compared to the previous year.

Inflation

The consumer price index (CPI) reached 3.54 percent in 2018, lower than the government’s target of four percent.

Core inflation (which excludes food, fresh foodstuffs, energy, healthcare, and education services) grew by 1.48 percent, lower than the government’s target of 1.6 percent.

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Going forward

For 2019, the government has set a softer GDP target of 6.8 percent, which is achievable as domestic demand and foreign investments are predicted to continue their growth momentum in 2019.

In addition, the export industries will take advantage of the ongoing trade war and trade agreements such as the EU Vietnam FTA (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to expand their markets, which will further strengthen Vietnam’s position as one of the major manufacturing hubs in the region.  

Vietnam Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in Hanoi and Ho Chi Minh City.  Readers may write vietnam@dezshira.com for more support on doing business in Vietnam.