Vietnam economy grows at best rate in a decade

While agriculture and wholesale and retail trade have seen steady rises, manufacturing remains a the pillar of Vietnam's growth. (Photo: AFP/Hoang Dinh Nam)

The reading comes as the communist country is poised to expand its overseas markets after signing an 11-nation Asia-Pacific trade deal this month that replaces the Trans-Pacific Partnership (TPP), scrapped by the US last year.

Observers said a spike in exports was a promising sign that Vietnam's market has not been dented by US President Donald Trump's protectionist agenda.

The 7.38 per cent GDP expansion in January-March was sharply up from the rate of just over five per cent seen in the same period last year, according to the Government Statistics Office, and well above the government's annual target of 6.7 per cent.

The figures are the best since a 7.40 per cent reading in the first quarter of 2008.

While agriculture and wholesale and retail trade saw steady rises year-on-year, manufacturing remained the pillar of growth, expanding more than 13 per cent, the GSO said.

Vietnam is a manufacturing hotspot in Asia especially for electronics, drawing industry heavyweights such as LG Electronics, Samsung and Canon with its cheap labour and open-door trade policies.

First-quarter growth sagged last year after Samsung - which accounts for about 25 per cent of Vietnam's overall exports - announced a massive recall of its Galaxy Note 7 phone over an exploding battery debacle.

But exports bounced back, topping more than $54 billion in the first quarter, a 22 per cent rise on-year, the GSO said.

Analyst Barry Weisblatt said exports remained robust in the face of Trump's "America First" clarion call.

"The US has historically been Vietnam's largest export market, so there were fears following the election that his policies would impact Vietnam's exports to the United States," Weisblatt, head of research at Viet Capital Securities, told AFP.

"While we are seeing strong growth in exports to China and the EU, the overall exports are not being damaged by Trump's policies so far," he added.

After the release of the figures, officials in Hanoi said strong growth at the end of 2017 helped to buoy first-quarter data, though Weisblatt said it was too soon to dramatically tweak annual forecasts.

"We may raise our full-year forecast slightly, but probably not a lot," he said.

The World Bank has set its 2018 forecast at 6.5 per cent while Viet Capital Securities is targeting 6.8 per cent.