Key trading partners’ slowing economies cast a bleak outlook for the rest of the year.
HANOI: Vietnam’s exports contracted for a fourth month so far this year, adding to risks of a growth slowdown in an economy already battling a crisis in the local property sector.
Exports declined 5.9% in May, while imports shrank 18.4%, according to data released by General Statistics Office in Hanoi. While the drop in exports was slower than a 10.3% fall seen in a Bloomberg survey, the imports performance was worse than expected.
Headline inflation in May quickened 2.43% from a year ago, the lowest level in 14 months, other data showed. Meanwhile, core inflation, which strips out costs of food, fuel, healthcare, and education services, came in at 4.54%.
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A global trade downturn is hurting export-reliant economies across the region including manufacturing powerhouses Singapore and Taiwan amid weakening world demand and smaller-than-expected benefits from China’s reopening.
Meanwhile, slowing inflation has given Vietnam’s central bank room to reduce borrowing costs to support businesses, including builders, and help spur economic activity. The State Bank of Vietnam bank has slashed key policy rates three times this year.
The economy will continue to face trade pressures for the rest of the year, said deputy planning and investment minister Tran Quoc Phuong, according to the government’s website.
Vietnam’s first-quarter processing and manufacturing sector experienced significant decreases as trade partners such as the US, EU and Japan grappled with slowing economies and declining demand, Phuong said during a virtual talk on Saturday afternoon.
The central bank, meanwhile, has vowed to keep pressuring lenders to lower loan rates to help stimulate the economy.