GDP Grows 3.82% in Q1

12:54:08 PM | 4/4/2020

The General Statistics Office (GSO) recently released socioeconomic data for the first three months of 2020. The gross domestic product (GDP) was estimated to expand by 3.82% in the first quarter, the lowest in 10 years, illustrating economic hardship caused by the rapidly evolving Covid-19 pandemic.

Generally, the agriculture, forestry and fishery sector edged up 0.08% (contributing 0.2% to the overall growth); the industry and construction sector expanded 5.15% (contributing 58.4%); the service sector 3.27% (contributing 41.4%). Market services such as wholesaling and retailing grew 5.69%; financial, banking and insurance activities 7.19%.

Regarding the economic structure in the quarter, according to the GSO, the agriculture, forestry and fishery sector accounted for 10.11%; the industry and construction sector 35.52%; the service sector 43.71%; and product taxes minus product subsidies 10.66%.

According to GSO, the industry and construction sector slowed down in the first quarter because of Covid-19 pandemic impacts, with the processing and manufacturing sector seeing the lowest growth in the 2016-2020 period. Power production and distribution grew steadily while the mining sector sank sharply on falling crude oil production.

Commercial and service activities were also less active due to Covid-19. Consumers restricted shopping, traveling and eating out. International visitor arrivals to Vietnam slumped 18.1% year on year in the first quarter. The sharpest reduction was Chinese, Korean and American visitors.

With respect to consumption GDP, the final consumption looked up 3.07% year on year (4.02 percentage points lower than the same period of 2019), of which final consumption by increased by 2.92% (versus 7.22% in the first quarter of 2019; asset accumulation accrued by 2.2%, the lowest since 2013; export of goods and services rose 1.59%; import of goods and services added 1.05%. This growth showed a stalled supply of goods and inputs in the first three months of the year on strong impacts of the Covid-19 pandemic.

The business sector was directly hit by the plague with up to 18,600 companies temporarily suspending their operations, 26% more than a year-ago period. However, surveys showed that businesses expected Covid-19 would end soon and business performance would be better in the second quarter.

Covid-19 effects plus a sharp drop in world petroleum prices and abundant poultry supply caused the consumer price index (CPI) in March to fall by 0.72% from the previous month, the lowest in 2016-2020. However, the average first-quarter CPI was highest in four years. The commodity exchange rate decreased for the first time in three years, reflecting unfavorable export prices of Vietnamese goods to foreign countries.

The first-quarter GDP was worse than the previous forecast of the Ministry of Planning and Investment. Earlier, anticipating direct and indirect impacts of the Covid-19 pandemic on economic sectors, the ministry expected that, if the Covid-19 epidemic was controlled in the second quarter of 2020, the 2020 GDP would increase by 5.96% (0.84 percentage points lower than that of Resolution 01), with the first quarter rising by 4.52%, the second quarter by 5.1%, the third quarter by 6.7% and the fourth quarter by 6.81% (the lowest level in seven years). The ministry also forecast that Vietnam would be among the four most affected economies in the region, after Singapore, Thailand and Hong Kong (China).

GSO General Director Nguyen Bich Lam said, given the Covid-19 pandemic and the ensuing worsening global economy, the GDP growth of 3.82% is rather good compared with other countries in the region and in the world, demonstrating the efforts of the political system, business community and people of the country. With continued macroeconomic stability, the processing and manufacturing industry, albeit rising at a low rate, still played an important role in the country's economic development and social security.

By Anh Mai, Vietnam Business Foru m