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Despite slightly moderating from 2018, the manufacturing sector continued its strong growth in 2019, the fifth straight year of a double-digit pace expansion (growing at 11.3% y-o-y).

Manufacturing Pushes Up Vietnam’s Economic Performance in 2019
According to HSBC’s statisics and data, four days before entering 2020s, Vietnam has become the first Asian country to release its 2019 transcript, and quite an impressive one amidst a challenging global economic environment. Vietnam’s 4Q GDP expanded 7.0% y-o-y, bringing full-year growth to 7.0% in 2019, broadly in line with HSBC’s forecast of 6.9% and exceeding the government’s target of “6.6-6.8%”. 
This marks the second consecutive annual growth rate above 7%, following growth of 7.1% in 2018.  Dissecting the indicators in various sectors, it’s not difficult to see why Vietnam has been a regional outperformer.
When one thinks of Vietnam these days, its manufacturing sector is usually the first thing that comes to minds. Despite slightly moderating from 2018, the manufacturing sector continued its strong growth in 2019, the fifth straight year of a double-digit pace expansion (growing at 11.3% y-o-y). 
Contrary to many Asian countries which have seen a contraction in industrial activity, Vietnam’s manufacturing s ector remained resilient, contributing 30% to headline GDP growth. Vietnam’s positive manufacturing performance is a reflection of its competitive external sector.
Despite global trade uncertainty, Vietnam saw its exports still growing at 7.9% y-o-y in 2019, thanks to rising electronics shipments that accounted for almost 40% of overall export growth. This is particularly notable in Vietnam’s exports to the US, which alone accounted for 70% of the form er’s headline export growth. 
As the US-China trade tensions dominated global headlines in 2019, it’s no surprise to s ee a boom of Vietnam’s electronics exports , as Vietnam is a close competitor of mainland China’s low-end electronics assembly. 
As a result, Vietnam’s electronics exports to the US jumped 76% y-o-y in the first eleven months of 2019. In addition to electronics products, Vietnam’s textile and footwear as well as machine and equipment sectors also saw sustained expansion. 
With imports growing at 7.5% y-o-y, Vietnam’s trade balance registered at $9.1 billion surplus for the full year, the largest ever seen. Indeed, Vietnam’s outstanding trade performance can be partly explained by trade diversion.

DIEP NGUYEN