Vietnam's glowing economic statistics raise eyebrows at home

Yuji Nitta Tuesday | 07/18/2023 12:00

Demand for structural steel in Vietnam has plummeted as the struggling economy has left some buildings unfinished. Photo by Reuters.

Skepticism about economic statistics released by Vietnam's central and local governments is spreading, as gross domestic product and tourism figures show marked improvement despite poor business sentiment.

The country's structural steel industry has been hit hard by plummeting demand from lack of investment and an economic slowdown. Production facilities have seen operating rates fall to about 30%, and steelmakers are in the red.

In the capital Hanoi, new buildings that have been abandoned mid-construction are becoming a more common eyesore.

"Business sentiment is worse than during the global financial crisis," a source at a Japanese trading house said.

However, the General Statistics Office of Vietnam said on June 29 that the country's real gross domestic product in the April-June period was estimated to have grown by 4.14%, surpassing 3.28% growth in January to March. The June industrial production index was 2.8%, marking two straight months of statistical improvement.

Business sources say the figures seem odd. Just before the government released the numbers, Standard Chartered forecast GDP growth of 1.5% for the April-June quarter.

Even a General Statistics Office survey showed pessimism in the business community, with only about 30% of manufacturing companies saying that business trends in the April-June period improved from the previous quarter.

Vietnam's GDP growth rate statistics tend to trend upward in the second half of the year. Looking at the average of quarterly GDP growth rates from 2010 to 2019, a clear increase can be seen from the 5.87% average in the January-March quarter to 6.75% in the October-December quarter.

Doubts have also been raised over official figures from Quang Nam province in central Vietnam, home to tourist destination Hoi An. The province reported 4.6 million tourists visited between January and June, nearly double the same period last year.

However, some local hotel operators whose businesses continue to struggle have expressed dissatisfaction with authorities over the questionable numbers, according to Vietnamese media.

"According to micro data collected by the General Statistics Office, the April-June quarter saw improved conditions in many industries compared with the January-March quarter," said a senior official from the statistics office, who appeared in local media to quash the idea of any discrepancies.

Source: Nikkei Asia