By Khanh Vu and Phuong Nguyen
HANOI (Reuters) – Vietnam on Thursday reported faster economic growth in the second quarter, driven by the services sector, despite a slump in exports.
Gross domestic product (GDP) in the second quarter grew 4.14% from a year earlier, faster than the 3.28% expansion seen in the first quarter, the General Statistics Office (GSO) said in a report. First quarter growth was revised down from 3.32%.
Vietnam, a regional manufacturing hub, has been trying to prop up its economy amid slowing global demand, with the central bank cutting its policy rates four times so far this year and lawmakers extending a cut in value added tax.
The services sector grew 6.11% in the second quarter from a year earlier, while the agricultural sector grew 3.25%, and the manufacturing and construction sector expanded 2.50%, the GSO said.
“The government’s policies to encourage domestic consumption and promote tourism have contributed to the growth of the services sector,” the agency said.
Vietnam’s exports in the second quarter fell 14.2% from a year earlier due to weak global demand, the GSO said, adding that imports fell 22.3%.
Analysts say the sharp decline in imports could indicate a slowdown ahead in industrial production, as businesses reduce procurement of raw materials and equipment. Vietnam is a key exporter of electronics, garments and textiles, footwear and wood items, including for top global brands.
The country’s industrial output in the January-June period fell 1.2% from a year earlier, it said.
Retail sales of goods and services in the first half of this year rose 10.9% from a year earlier, while average consumer prices in the period rose 3.29%.
The country targets GDP growth of 6.5% this year, slower than an expansion of 8.02% last year.
(Editing by Kanupriya Kapoor)
