Vietnam's 2016 economy seen slowing to 6.2-6.3%

[HANOI] Vietnam's economic growth in 2016 is expected to slow to 6.2-6.3 per cent, after expanding last year at the fastest pace in eight years, as export and industrial production growth is projected to fall short of target, a government official said on Friday.

Vietnam's economy is widely seen as among the most resilient in a turbulent Asia, but government data released last week El Nino-linked drought had hit rice and coffee production.

First-half growth cooled to an estimated 5.52 per cent, from 6.32 per cent in 2015, the government said.

Exports this year could rise 7 per cent, below the government's target, while rising consumer prices and a higher crude oil price could boost the annual inflation rate to 5.0-5.5 per cent, Le Quoc Phuong, deputy head of the trade ministry's information centre, told Reuters.

"The costs of health service and education will continue to rise as scheduled," Mr Phuong said, confirming an earlier state media report.

His forecast is slightly below a projection of 8 per cent given by the industry and trade minister Tran Tuan Anh at a cabinet meeting last Friday.

The Vietnamese government has targeted to keep annual inflation at 5 per cent and is striving to boost exports by 10 per cent this year to ensure economic growth of 6.7 per cent.

The Southeast Asian country's economy, driven by exports, grew 6.68 per cent last year, the fastest since 2007, based on revised government data, but exports rose just 7.9 per cent, below the 10-per cent target.

Vietnam is the world's largest exporter of robusta coffee, black pepper and cashew nuts and ranks the third-largest in exporting rice after India and Thailand.

Vietnam's industrial output is forecast to grow 8 per cent this year, Mr Phuong said, after expanding 9.8 per cent in 2015.

An economic slowdown in the first half of 2016 is seen as a stabilising process after the 2015 peak, leading brokerage SSI Securities said in a weekly report issued on Monday.

"Nevertheless, 2016 growth should be higher than 2012-2014 level as Vietnam's economy gradually recovers from the bottom," the report said.

SSI Securities Vietnam's saw GDP growth at 6.2 per cent this year and recovering to 6.6 per cent in 2017 thanks to economic reforms and free trade agreements.

REUTERS