A number of foreign institutions have lowered their forecasts for Vietnam’s economic growth in 2016 after agricultural production experienced for the first time in years a decline in the first half of this year.
The country’s gross domestic product (GDP
) grew 5.52% year-on-year in the first six months of this year, slowing from a 6.32% expansion in the same period of last year.
has recently lowered its growth forecast for the country to just 6.0% for 2016, down from the previous 6.3%.
Additionally, the Business Monitor International (BMI) also downgraded its growth forecast for 2016 to 5.9%, from its previous estimate of 6.3%.
Agriculture, after years of being a buffer for Vietnam to weather global turbulence, has put a damper on its GDP growth.
It is latest report, Bloomberg said Vietnam’s worst drought in three decades is crippling its farming economy. Vietnam now is among the world’s biggest exporters of farm produce such as robusta coffee, rice, rubber, pepper and cashew.
A new research report from BMI suggests the harsh weather conditions are estimated to have cost the country a total of $681 million.
The softness in agricultural output has prompted ANZ to trim its 2016 growth forecast for Vietnam to 6.4% from 6.9%.
in April also cut its 2016 and 2017 forecasts for Vietnam’s growth to 6.3% and 6.6%, respectively, from its earlier projections of 6.7% and 6.8% after a lower-than-expected 5.46% expansion in the first quarter.
Alternatively, manufacturing and tourism remain bright spots for Vietnam’s economy, according to Bloomberg and BMI.
The Southeast Asian country is unlikely to reach the government’s ambitious GDP growth rate of 6.7% for the whole year, foreign and domestic institutions say, as its economy needs to expand by at least 7.6% in the second half.