Hanoi: Ho Chi Minh City, Vietnam’s economic hub, recorded a year-on-year growth of 0.7 per cent in the first quarter as persistent global uncertainties and high interest rates led to a contraction in manufacturing sectors, underscoring challenges facing the Southeast Asian country’s biggest city in the year ahead, local media reported on Wednesday.
Ho Chi Minh City’s gross regional domestic product in the first quarter is the lowest among five centrally-run cities, Secretary of the municipal Party Committee Nguyen Van Nen said, referring to the economic expansion of Hai Phong at 9.65 per cent, Da Nang at 7.12 per cent, Hanoi at 5.8 per cent and Can Tho at 4.02 per cent, reports Xinhua news agency.
The southern business hub’s slow growth is broadly in line with expectations of a gloomy global outlook due to high inflation, financial turmoil, and spillover from the geopolitical conflict, said the city’s statistics office.
The city saw a negative growth of 3.6 per cent in the sector of manufacturing and construction, while services rose 2.07 per cent and agriculture gained 2.06 per cent from a year earlier, official data showed.
There was a significant deceleration in nearly half of the most critical service industries of Ho Chi Minh City, including real estate activity down 16.2 per cent, transportation and warehousing business set back 0.63 per cent, and healthcare services down 4.82 per cent.
High interest rates coupled with a slowdown in overall demand pose a further downside risk to manufacturing activity.
The city’s industrial output in the first quarter fell 0.9 per cent from a year ago with processing and manufacturing companies posting a year-on-year increase of 4 per cent in their inventories.
The palpable weakness in household consumption continued its three-month streak of decline in March, which led to a modest growth of 9.1 per cent in the first quarter from a year before.
Foreign direct investment inflows rose 22.4 per cent as of March 20 to $497.5 million year on year, data showed.
A surge of public spending, combined with the disbursement of foreign direct investment, will be the key driver for economic recovery and growth of Ho Chi Minh City, economist Vo Tri Thanh told local media.