Vietnam Q1 GDP growth slows; smartphone slowdown weighs on exports

Vietnam’s economy grew at a slower pace in the first quarter as weakening global demand for smartphones weighed on exports, government data showed on Friday.

Gross domestic product grew 6.79 percent in the January-March period, slower than 7.31 percent in the December quarter, and compared to 7.45 percent in the first quarter last year, the General Statistics Office (GSO) said.

The processing and manufacturing industry grew 8.63 percent, while the services sector rose 6.50 percent and the agricultural sector was up 2.68 percent, the GSO said.

“The economy is still facing numerous difficulties and new challenges,” the GSO said in a statement.

Exports of smartphones, the country’s biggest export earner and mostly produced by South Korea’s Samsung Electronics, fell 4.3 percent from a year earlier to $12.05 billion in the first quarter, the GSO said, compared to a 62.2 percent rise in the first quarter last year.

Overall, Vietnam’s exports in the first quarter rose 4.7 percent from a year earlier to $58.51 billion, much slower than an annual expansion of 24.5 percent in the same period last year.

Capital Economics said it expected Vietnam’s economic growth to slow due to weak exports and tighter fiscal policy.

“Weaker global demand and a downturn in the technology sector have contributed to slowdown in export growth over the past few months, and are likely to weigh on exports over the next couple of quarters,” the agency said in a note.

It expected GDP growth to slow to 6.0 percent for this year and 2020.

The Southeast Asian country posted GDP growth of 7.08 percent last year, the quickest pace since 2011 and faster than an expansion of 6.81 percent in 2017.

Vietnam targets economic growth of between 6.6 percent and 6.8 percent this year.

Vietnam’s consumer price index in March rose 2.7 percent from a year earlier, led by an increase in the cost of food and education services, the GSO said.

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