Vietnam Q3 economy grows 7.4% despite heavy typhoon losses

SINGAPORE (ICIS)–Vietnam’s economy expanded by 7.4% year on year in the third quarter despite hefty losses from Typhoon Yagi, with growth marking its strongest in two years on robust exports.

• Yagi causes $3.3 billion in economic losses
• Jan-Sept GDP average growth at 6.82%
• Exports grow at double-digit annual rate

The third-quarter GDP print represents an acceleration from the revised 7.09% year-on-year expansion in Q2, despite taking huge economic hit from Typhoon Yagi, which wrought havoc in Vietnam’s northern regions in September.

For the first nine months of 2024, the economy posted an average annualized growth of 6.82%.

Yagi, which was Asia’s strongest storm to date – killed 345 people in Vietnam, with total economic damage to the country estimated at around $3.3 billion, the General Statistics Office (GSO) said on 6 October.

The agriculture, forestry and the fishery sectors were especially affected by Yagi, the GSO said.

In September, the country’s manufacturing activity indicated a contraction, with its purchasing managers ‘s index (PMI) falling to 47.3, way below the expansion threshold of 50 and down by 52.4 in August, according to a survey by financial information services provider S&P Global.

“Typhoon Yagi had a major impact on the Vietnamese manufacturing sector during September, with heavy rain and flooding leading to temporary business closures and delays across production lines and supply chains,” S&P Global said on 1 October.

Vietnam is the fourth-biggest economy in southeast Asia and is a net importer of petrochemicals.

Operations at its major petrochemical complexes were unscathed as their locations were not in Yagi’s path. Long Son Petrochemical is in the southern province of Ba Ria-Vung Tau; while the Dung Quat petrochemical complex is in the central Quang Ngai province; and the Nghi Son petrochemical complex is in the north-central Thanh Hoa province.

EXPORTS DRIVE UP GDP GROWTH
Vietnam, like most Asian economies, count exports as a major pillar of growth, which is being threatened by overall weakness in the global economy.

But the country’s overall exports managed to post a double-digit annualized growth of 10.7% in the third quarter.

For the first nine months of this year, Vietnam’s exports rose by 15.4% year on year to $299.6 billion while imports grew at a faster rate of by 17.3% at $278.8 billion, indicating robust domestic activity.

The US is Vietnam’s biggest market, accounting for a third of the southeast Asian country’s exports for the period.

Its biggest source of imports was China, whose share of the total was around 38% in the first nine months of 2024.

The International Monetary Fund (IMF) forecasts Vietnam’s economic growth is projected to recover to 6.1% in 2024, “supported by continued strong external demand, resilient foreign direct investment, and accommodative policies”.

The forecast is higher than the previous year’s GDP growth of 5.05% and was near the low end of the Vietnamese government’s target of 6.0-6.5%.

However, Vietnam’s export-driven economy remains vulnerable to a global growth slowdown, persistent geopolitical tensions, and escalating trade disputes, the IMF warned.

Focus article by Nurluqman Suratman

Thumbnail image: An aerial drone photo shows a steel bridge collapsed in Phu Tho Province of northern Vietnam, 9 September 2024. (Xinhua/Shutterstock)