By Jason Folkmanis
July 1 (Bloomberg) — Vietnam’s economic growth accelerated in the second quarter as revived bank lending helped boost manufacturing and consumer spending.
Gross domestic product rose 6.4 percent in the three months through June from a year earlier, from a 5.83 percent first- quarter expansion, based on figures released today by the General Statistics Office in Hanoi. For the first half of 2010, the economy grew 6.16 percent from a year earlier, from 3.87 percent in the same period of 2009.
“Our loan growth was stronger in the second quarter, particularly corporate lending,” said Ly Xuan Hai, Ho Chi Minh City-based chief executive of Asia Commercial Bank, the country’s biggest non-state-owned bank. “Economic growth in the range of 6.2 percent to 6.4 percent is not bad, though we have the potential to do better.”
GDP expanded 5.32 percent in 2009, the slowest pace since 1999, as the country’s export industries slumped amid a struggling global economy. Vietnam’s government is targeting annual economic growth of as fast as 8 percent until 2020 in a bid to boost per-capita income to at least $3,000 and attain the status of a “modern industrialized country.”
“Vietnam has a good first-half report card,” Tai Hui, head of Southeast Asian economic research at Standard Chartered Plc in Singapore, said before today’s release. “The data we have seen on growth, industrial production and retail sales reflect firm domestic fundamentals.”
The government, which expects 6.5 percent full-year growth, began pressing lenders to cut interest rates after first-quarter credit expanded by 3.3 percent, compared with the central bank’s 25 percent target for 2010. By June the pace of lending had picked up to 10.5 percent, supporting demand for Vincom Joint- Stock Co.’s apartments and steel produced by Hoa Phat Group Joint-Stock Co.
Vietnam should be able to pursue an expansionary monetary policy without stoking inflation in part due to “contained pressures from commodity prices,” said Matt Hildebrandt, an economist at JPMorgan Chase & Co. in Singapore. Inflation slowed for a third month in June to 8.69 percent.
“Construction should have a pretty strong bounce-back,” Hildebrandt said in a telephone interview before today’s report. “In the second half you’re probably going to see faster credit growth if the government is determined to achieve its growth target.”
Industry and construction, which accounted for 40 percent of the economy in the first half, expanded 6.5 percent in the six months through June from a year earlier. The sub-component measuring only construction grew at a 9.89 percent clip. Services, which made up 38 percent of GDP, grew 7.05 percent.
Agriculture, forestry and fisheries, which accounted for the remaining 22 percent of the economy, gained 3.31 percent in the first half from a year earlier.
“Vietnam’s economy in the first five months of the year continued the trend of recovery quite strongly,” the central bank said in a report prepared for a June meeting with agencies and countries that provide development aid. The Southeast Asian nation “is recovering sustainably after a period of being hammered down by the global economic slowdown,” it said.
–With assistance from Diep Ngoc Pham in Hanoi. Editors: Stephanie Phang, Beth Thomas
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