Vietnam Q3 GDP grows 8.23% y/y - statistics office

Vietnam's economy demonstrated robust growth in Q3, expanding 8.23% year-over-year, despite new U.S. tariffs on its exports and transshipments. The country reported a significant Q3 trade surplus of $8.91 billion, with strong overall export and import growth, though September saw a slight monthly decline in exports to the U.S. The central bank is actively prioritizing economic expansion, targeting 8.3%-8.5% GDP growth for the year and urging banks to cut lending rates to stimulate credit growth, signaling a proactive stance against potential tariff impacts.

Analysis

Gold rallies to record high over $3,900/oz amid yen slump, US rate cut bets By Khanh Vu and Phuong Nguyen HANOI (Reuters) - Vietnam’s economy grew 8.23% year-on-year in the third quarter, up from 7.96% in the second, despite a 20% U.S. tariff on exports that took effect on August 7, government data showed Monday. Exports over the July-September period rose 18.4% from a year earlier to $128.57 billion, while imports jumped 20.2% to $119.66 billion, resulting in a trade surplus of $8.91 billion, the National Statistics Office said in a report. As well as the 20% tariff, the United States also imposed a 40% levy on transshipments from third countries through Vietnam. Total September exports fell 1.7% compared to a month earlier, amounting to a value of $42.67 billion. Shipments to the United States over the month were down 1.4% compared to August. Two-way trade between Vietnam and the United States stood at $112.8 billion during the first nine months of this year as a whole, while trade with China reached $134.4 billion, the NSO said. China is Vietnam’s largest source of imports. Industrial production in the Southeast Asian manufacturing hub also rose 9.1% in the first nine months of this year from a year earlier, the NSO said. Consumer prices in September rose 3.38% from a year earlier, it said, and retail sales were up 11.3%. Foreign arrivals to the country in the first nine months of this year also rose 21.5% year on year to 15.4 million, it said. Vietnam is targeting gross domestic product growth of 8.3%-8.5% this year. That is faster last year’s 7.09% growth, and higher than the World Bank’s forecast of 6.6% and the International Monetary Fund’s estimate of 6.5% growth. On Friday, the central bank said it would prioritise growth over the remainder of the year and it urged banks to cut their lending interest rates. The central bank said credit growth, a key driver of the economy, was expected to increase 19%-20% this year. For the first nine months of this year, exports rose 16% from a year earlier to $348.74 billion, while imports were up 18.8% at $331.92 billion, amounting to a trade surplus of $16.82 billion, according to the NSO. The United Nations Development Programme has estimated that tariffs could cut Vietnam’s exports to the U.S. by one-fifth, making it the worst-hit country in Southeast Asia. Which stock should you buy in your very next trade? AI computing powers are changing the stock market. Investing.com's ProPicks AI includes dozens of winning stock portfolios chosen by our advanced AI. Year to date, 3 out of 4 global portfolios are beating their benchmark indexes, with 98% in the green. Our flagship Tech Titans strategy doubled the S&P 500 within 18 months, including notable winners like Super Micro Computer (+185%) and AppLovin (+157%). Which stock will be the next to soar? Vietnam's economy demonstrated exceptional resilience in the third quarter, with year-over-year GDP growth accelerating to 8.23% from 7.96% in Q2. This expansion occurred despite the imposition of a 20% U.S. tariff on exports and a 40% levy on transshipments, which took effect in August. The country's trade dynamics remained robust, with Q3 exports rising 18.4% annually to generate a significant trade surplus of $8.91 billion. However, initial signs of tariff impact may be emerging, as total exports and shipments to the United States fell month-over-month in September by 1.7% and 1.4%, respectively. In response to external pressures, the central bank is adopting a decidedly pro-growth stance, urging banks to cut lending rates to support a targeted 19%-20% credit expansion for the year. This policy underpins the government's ambitious full-year GDP growth target of 8.3%-8.5%, which starkly contrasts with more conservative forecasts from the World Bank (6.6%) and the IMF (6.5%). Strong domestic fundamentals, including a 9.1% rise in nine-month industrial production and an 11.3% increase in retail sales, currently support this optimistic outlook, while inflation remains contained at 3.38% in September.

Key Decisions for Investors

• Maintain a constructive outlook on Vietnamese assets given the strong Q3 GDP growth, but closely monitor high-frequency trade data for further evidence of tariff impact following the slight downturn in September's exports.
• Consider overweighting domestic-focused sectors like banking and retail that are poised to benefit directly from the central bank's accommodative monetary policy and aggressive credit growth targets.
• Be cautious of the significant divergence between Vietnam's official growth targets and international forecasts, as any failure to meet these ambitions under trade pressure could introduce volatility to the market.
• Scrutinize companies within the export sector for supply chain vulnerabilities, particularly their reliance on imports from China, which could amplify margin pressure in conjunction with U.S. tariffs.