World Economy

Vietnam Is Asia’s Newest Tiger Economy

Vietnam’s GDP growth reached 7.1% y-o-y in H1.Vietnam’s GDP growth reached 7.1% y-o-y in H1.

Asia’s original fast-growing ‘tiger’ economies in the 1970s and 1980s were Hong Kong, Singapore, Taiwan and South Korea. The baton then passed to a new generation of fast growers: Thailand, Indonesia, Malaysia and, more recently, India.

Asia’s latest ‘tiger’ however, is Vietnam with the latest data showing its economy roaring in 2018 as it emerges as one of the world’s fastest growing economies, Qatar National Bank said in its latest report, Yahoo reported.

A range of indicators show Vietnam’s booming economy. GDP growth raced ahead by 7.1% year-on-year in the first six months of 2018–the economy’s fastest growth since 2011. The manufacturing sector is leading the charge with output up 13.1% y-o-y in the first half of the year. Construction is also playing a strong supporting role with output in that sector up 7.9% y-o-y over the same period.

The counterpart to Vietnam’s manufacturing boom is surging exports. Monthly trade statistics can be highly volatile but the latest data show goods exports up over 20% y-o-y in the first half of the year, following growth of over 17% in 2017 as a whole, QNB said.

Manufacturing and export success has been driven by Vietnam’s ability to attract large foreign direct investment inflows into sectors such as clothing, footwear, and, above all, electronics.

It is now estimated, for example, that one in 10 smartphones worldwide are now made in Vietnam. Latest data show FDI inflows also booming. These were worth an estimated $13 billion in H1 2018 with an 11% y-o-y growth.

To put these FDI inflows in context, QNB said Vietnam’s GDP in 2017 was worth around $220 billion, according to the latest data from the International Monetary Fund. “Vietnam’s economic success is noteworthy as it comes at a time when many developing economies are struggling to match the success of Asia’s earlier ‘tigers’ and sustain rapid economic growth through manufacturing and export booms.

QNB said the foundation of Vietnam’s success is obvious: favorable demographics and low wage rates. Political stability also helps as does the country’s geographical location. Vietnam is also close to major global supply chains, particularly in electronics, which have emerged over the last decade or so.

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