(Bloomberg) -- Vietnam, Asia’s growth star whose economy surpassed all expectations in the fourth quarter, could face price pressures and challenges to the prime minister’s 8% expansion target on the Trump administration’s policies.
Vietnam’s government officials, bracing for a possible new era of tariffs during President-elect Donald Trump’s second term, are anticipating possible disruptions to global markets, Nguyen Thu Oanh, head of the price statistics department for the the General Statistics Office, said during a Hanoi briefing on the latest growth numbers.
“Increasing protectionism and trade barriers will worsen trade tensions and disrupt the global supply chain,” she said. “These can fuel inflationary pressure and, at the same time, slow down the economic growth rate as well as causing increases in the unemployment rate.”
A robust finish to 2024 has officials banking on a stronger 2025 even as they are concerned about disruptions that may arise from Trump’s policies. Prime Minister Pham Minh Chinh is pushing to expand the economy by at least 8% this year, although the official target set by the parliament is 6.5%-7%. A government drive for double-digit growth would be “very hard” to reach, according to the GSO.
Gross domestic product rose 7.55% in the October-December period from a year earlier, the General Statistics Office said in a statement on Monday. That was higher than all eight estimates in a Bloomberg News survey and tops the 7.4% growth in the third quarter.
Full year expansion of 7.09% surpassed the official target of up to 6.5% and the 6.7% median estimate of analysts in a separate Bloomberg survey.
The country’s benchmark stock index climbed 0.1% at the noon break. The dong strengthened, trading at 25,389 per dollar as of 12:12 p.m. local time, according to prices from banks compiled by Bloomberg.
Vietnam’s economy, where the value of exports is about the same size as its GDP, steadily recovered last year as global demand for its products picked up.
Exports gained for a 10th straight month in December, growing 12.8% year-on-year, according to the GSO. Growth in consumer prices remain manageable, rising at 2.94% in December from a year ago, the statistics office said.
Double-digit growth in overseas sales, along with resilient foreign investments, helped support manufacturing activity. Strong retail sales in the fourth quarter revealed increasing domestic consumer spending.
Vietnam’s reliance on global markets, however, could weigh on its economy this year, as well. The country’s manufacturers, which make everything from sneakers to Samsung Electronics Co. smartphones and Apple Inc. products, could see an increase in costs of imported materials, creating inflationary pressure, Oanh said.
Rising prices of imports could affect the Vietnamese dong-US dollar currency exchange rate, further adding to cost increases, she said.
The government will work to control inflation through price adjustments on services and goods produced by state companies, such as electricity, medical services and education, Oanh said. Hanoi can also rely on previous tax breaks, reductions in lending costs, boosting public investments and pushing for strong credit growth to counter global headwinds while being mindful not to put upward pressure on prices of consumer goods, she added.
Vietnam expects foreign investment to keep flowing into the country, Nguyen Thi Huong, head of the GSO, said at the briefing in Hanoi.
The industrial sector remained strong, with fourth quarter manufacturing output rising 9.83% from year ago, GSO said.
“The robust rebound in export-led manufacturing and trade, bolstered by the resilient US economy, is expected to continue supporting GDP growth” in Vietnam, the Asian Development Bank said in a December report.
--With assistance from Nguyen Kieu Giang, Linh Vu Nguyen, Ailing Tan, Michael J. Munoz and Ditas Lopez.
(Updates with more details throughout the story.)
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