Vietnam was the fastest-growing country in Asia this past year

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Vietnam’s economy grew at the fastest pace in Asia this year, signaling momentum just before risks from a global slowdown began to materialize.

According to data released Thursday, the gross domestic product increased by 8.02% over the year. That was faster than the government’s initial target of 6%-6.5% growth and was aided by a quicker-than-expected 5.92% expansion in the final quarter.

Manufacturing, which grew 8.1% during the year, was the main driver of economic growth, according to Nguyen Thi Huong, head of Vietnam’s General Statistics Office. The strong improvement in services was another factor that supported growth.

The nation’s main stocks index was little changed after the data at 9:19 a.m. local time.

The better-than-expected showing gives Vietnam’s central bank the space to wait-and-watch before deciding to pivot monetary policy away from tightening. While the authority has raised the benchmark rate by 200 basis points in two moves this year to 6%, looming fears of debt default in Vietnam’s property-sector has given reason for concern about a China-style growth hit.

Vietnam “is performing well amid uncertainties in the global economy, risks to the economic outlook have become elevated,” The Asian Development Bank stated in a Dec. 14 Statement. “Though trade continues to expand, signs show weakening global demand for the country’s exports,” It was.

ADB forecasts Vietnam’s 2023 growth to be 6.3% as major trade partners see a slowdown.

The headline trade data already showed the weakness. In December, exports fell 14% compared to a year ago, marking the second consecutive month of decline. Retail sales rose 17.1% in December, while credit growth was 12.9%.

The consumer price increase of 4.55% in December, compared with December one year ago, was also a result. Core inflation excludes fuel, food and education prices. It rose at 4.99% faster than the previous year.

Vietnam will struggle to keep inflation in check next year, according to Bui Thuy Hang, the central bank’s deputy head of monetary policy department. The country will face consumer price increases, with inflation forecast at about 5% in early 2023, higher than the government’s full-year target of 4.5%, Hang told an economic forum in Hanoi on Dec. 17.

–With the assistance of Nguyen Yieu Giang, Nguyen Quynh, and Tomoko Sato

(Updates throughout with more details)

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