June 29, 2018 / 3:29 AM / 2 years ago

UPDATE 2-Vietnam sees strong H1 economic growth, expects H2 growth to slow

* H1 GDP growth at 7.08 pct y/y, highest in 8 yrs

* Agriculture, manufacturing support growth

* H2 growth seen slowing, but 6.7 full-yr target seen achievable (Adds comments from research firm in paras 5, 12)

By Mai Nguyen

HANOI, June 29 (Reuters) - Vietnam’s economy is estimated to have grown 7.08 percent over January-June this year, the fastest first-half growth since 2010, the General Statistics Office (GSO) said on Friday.

The Southeast Asian nation, whose economy expanded last year at 6.81 percent, the fastest rate since 2010, recorded strong growth in manufacturing, agriculture and services in the second quarter, growing 6.79 percent from the same period last year, GSO said.

Friday’s data showed processing and manufacturing industries grew 13 percent in the first half, the strongest rate for the first half in seven years, boosted by the output of manufacturing firms like Samsung, which produces most of its phones in Vietnam.

The decline in mining output was reduced from previous periods.

“While the short-term outlook is pretty decent, risks are building. A trade war between the US and China is a key concern,” Capital Economics said in a report on Friday.

First-half exports rose 16 percent from the same period last year to $113.9 billion, while imports increased 10 percent to $111.2 billion, leaving a $2.7 billion surplus for the period.

But the trade surplus trend seen in first four months turned into deficit over May and June, reflecting rising imports from countries with which Vietnam has free trade agreements, GSO General Director Nguyen Bich Lam told a news conference on Friday.

“We tried to make a trade surplus with these countries with the free trade agreements...but statistics in the first six months showed we have a trade deficit with them at quite a high level,” Lam said.

Growth in the second half of the year is expected to be slower than in the first six months, as mining production is seen falling because of weather-related factors such flooding, while growth from major manufacturers in Vietnam such as South Korea’s Samsung or Taiwan’s Formosa was seen slowing.

Vietnam targets 2018 growth at 6.7 percent, which GSO said is still achievable.

Fitch said in a report on Thursday it expects Vietnam to maintain healthy growth of 6.7 percent in 2018 and 2019, supported by continued foreign direct investment in export-oriented manufacturing and an expanding services sector.

“Risks to the sovereign credit profile are likely to remain limited unless there is an escalation that undermines investor confidence or disrupts economic activity significantly,” Fitch said, referring to recent demonstrations in the Communist country against proposed special economic zones and a controversial cybersecurity law. (Reporting by Mai Nguyen Editing by Eric Meijer)

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