Vietnam's economy expands 6.2 percent in 2016

By Ha Phuong   December 28, 2016 | 03:40 am PT
The agriculture sector has been facing obstacles this year. But foreign investment and trade surplus numbers all look good.

Vietnam’s economy expanded an estimated 6.21 percent this year, lower than the original target of 6.7 percent set by the government, according to data released on Wednesday.

The services and industry sectors were the key drivers as agriculture was hit by a series of extreme weather events.

"In general the economy has been growing strongly, except for the agriculture and mining sectors," said Nguyen Bich Lam, head of the General Statistics Office, pointing out there have been upheavals in financial and monetary markets around the world.

Inflation was also under control, at 4.74 percent, lower than the 5 percent ceiling, officials said earlier at a conference last week.

Retail sales reached around $118 billion in total, up 10 percent compared to last year. Vietnam’s retail turnover is expected to rise to $179 billion by 2020, according to the Association of Vietnam Retailers.

An investment magnet

Vietnam has become an attractive destination for foreign direct investment. The country has received an estimated $15.8 billion so far, up 9 percent from a year ago.

New FDI pledges and additional funds to finance existing projects this year saw a 7 percent increase. South Korean investors, notably LG, led the pack.

“A lot of investment has come this year in expectation of the TPP,” said Thomas Jandl, Non-Resident Scholar at Vietnam National University.

Now that the trade deal, formally known as the Trans-Pacific Partnership, may not become true, experts still say investment inflows for next year will remain strong. The Financial Times has listed Hanoi and Ho Chi Minh City among global investment magnets for the year ahead.

Trade surplus and new businesses

Exports reached around $176 billion this year, up 8.6 percent compared to 2015. The country posted a trade surplus of $2.68 billion, the biggest in six years, data from GSO showed.

Amid Samsung's fiery Note 7 scandal, exports of mobile phones and parts still saw an increase of 14 percent. Other key products such as pepper and coffee also posted growth, but not rice.

The U.K's Brexit vote to leave the European Union would not be a concern to the bilateral trade relations between the two countries, said an official from the General Statistics Office.

Experts also said, even without TPP, Vietnam has other free trade agreements to lean on and will continue to increase its trade activities.

The year has also seen 110,000 new business launches, up 16.2 percent from 2015, a trend attributed to more relaxed regulations under new enterprise and investment laws.

These new companies are expected to create nearly 1.3 million jobs. On the other hand, the number of businesses that shut down surged 32 percent to nearly 12,578.

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