Netizen Journalist

Boosted by Textile Exports, Vietnam's Economy Grows 7.72 Percent in the Second Quarter

Holiday Ayo - Vietnam recorded economic growth of 7.72 percent (year on year / yoy) in the second quarter of 2022. The Vietnam General Statistics Office said the growth of Gross Domestic Product (GDP) was influenced by high exports to the United States (US) and the recovery in public consumption due to minimal restrictions due to Covid-19.

As cited from Nikkei Asia, Wednesday (29/6), Vietnam's economic growth in the second quarter of 2022 was much higher than the previous quarter, which reached 5.05 percent.

Vietnam's economic growth in the second quarter also marked an economic reversal from -6.02 percent in the third quarter of 2021 or in the July-September range. The economic contraction at that time was influenced by the government's decision to restrict the movement of people, much more strictly than in neighboring countries.

The magnitude of economic growth in the second quarter was influenced by the high value of textile and apparel exports. Based on data from the Vietnam Textile and Apparel Association, exports of these commodities have reached a record high in the first 6 months.

On the other hand, relatively lower labor costs compared to other countries have positioned Vietnam as the first candidate for supply chain diversification outside of China or better known as "China plus one".

The supply chain diversification occurred in line with the heating up of trade relations between the US and China since 2019.

The conflict made the US and China both apply higher import duty tariff policies for goods from each country. Not surprisingly, many US manufacturers build or add factories in Vietnam.

"In addition, the nearly two-month lockdown in Shanghai has prompted us to temporarily increase production in Vietnam," said a representative from a foreign-affiliated garment factory.

Meanwhile, Chief Economist at Mizuho Research and Technologies, Hiromasa Matsuura, said economic growth in Vietnam was driven by the recovery of the world economy.

"The world's economic recovery has helped Vietnam's export-driven economic growth," said Hiromasa.

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