Crippled exports slow Vietnam's growth; over 2.4 lakh people laid off

Two-thirds were working in the leather and footwear industry. Many of those workers have shifted to the service sector, "accepting less stable jobs", GSO added.

Bank employees (L) deal with customers at a branch of VPBank in Hanoi on June 29, 2023.

HANOI: Vietnam’s economic growth slowed in the first half of the year as a slump in demand hit exports, authorities said Thursday.

The Southeast Asian country, a global manufacturing hub for clothing, shoes and electronics, saw an expansion of 3.72 per cent in January-June, down from 6.42 per cent in the same period of 2022.

“The economic growth was not high… in the context of difficulties and challenges from inside and outside the country,” the General Statistics Office said in a statement.

“There was a trend of more employment but the labour and job markets continue to face difficulties and challenges mainly due to enterprises’ lack of orders.”

More than 240,000 people were laid off in the first half of the year, around 80 per cent of them working in foreign-invested businesses, according to the GSO.

Two-thirds were working in the leather and footwear industry. Many of those workers have shifted to the service sector, “accepting less stable jobs”, GSO added.

The country earned more than USD 164 billion from exports in the first half, down 12 per cent on-year.

A serious slump in the real estate market — caused by high land prices, slow approval of projects, and problems securing investment capital — are adding to economic difficulties.

The number of businesses entering real estate was down by 63 per cent in the first quarter compared to the same period last year, the construction ministry said.

Nearly a third of real estate businesses were dissolved.

The communist state has long been a success story among Asian economies and the World Bank predicted Vietnam’s economic growth for 2023 would come in at 6.3 per cent, against eight per cent in 2022.

Officials have set a target of 6.5 per cent but the statistics office admitted reaching that goal “will be a huge challenge that requires high determination and efforts… of the whole political system, enterprises and people across the country.”

Dinh Quang Hinh, head of macro and market strategy at VNDIRECT Securities Corporation told AFP that “given difficulties in the world economic situation, it was not essential for Vietnam to pursue more than six per cent growth at any cost.”

Instead, the country should focus on the recovery and restructuring of the economy to be well prepared for development in years to come, he said.

Vietnam’s economy grew 4.14 per cent in the second quarter, marginally up from 3.32 per cent in the first three months of the year.