Vietnam posts fastest growth in Asia as economy picks up pace

Vietnam’s economy grew the fastest in Asia this year amid a global slowdown.

Based on official data, the gross domestic product grew by 8.02% year on year by December. Those numbers beat the government’s original target of 6-6.5% growth, also helped by a 5.92% rise in the latest quarter.

The main driver of economic growth was production, which grew by 8.1% over the year. Significant service improvements also contributed to growth.

The country’s main stock index remained virtually unchanged after the publication of official data.

Better-than-expected performance allows Vietnam’s central bank to bide its time and watch before deciding to change monetary policy from tightening. Vietnam raised the base rate by 200 basis points to 6%, however, there are concerns about the risk of default in real estate.

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While Vietnam is performing well and trade continues to expand, signs point to weakening global demand for the country’s exports.

Exports fell 14% from last year in December. Retail sales rose 17.1% during the month, while credit growth improved by 12.9%.

At the same time, consumer prices rose by 4.55% compared to last year in December. Core inflation, excluding prices for food, fuel, medical and educational services, grew at a faster pace – by 4.99%.

The deputy head of the central bank’s monetary policy department said it would be difficult for Vietnam to contain inflation next year. Consumer prices will rise in the country, and inflation is forecast to be around 5% in early 2023, above the government’s annual target of 4.5%.