Vietnam’s economy in 2016 slowed to an estimated 6.3% from 6.7% last year due to a contraction in mining and largely flat agricultural growth, the National Financial Supervisory Commission (NFSC) has projected.

The NFSC put growth of agriculture and mining at 0.05% and -3.6% respectively, compared with 2.03% and 6.5% last year.

Agricultural output largely remained unchanged from last year as a result of drought, saltwater intrusion and other natural disasters while the mining sector shrank because falling global oil prices forced Vietnam to cut production.

On the contrary, manufacturing saw continuous growth since the first quarter of 2015, except for the first three months of 2016 when phone production fell by 17.5%.

The purchasing managers’ index (PMI) in all months of 2016 was above 50, indicating expansion in manufacturing.

Growth in the services sector was also higher than expected at 6.8% compared with the target of 6.58%.

Exports in 2016 grew at a slower pace than 2015, estimated at 6.7% compared with last year’s 8.1% due to sharp reductions in rice and crude oil export values, which dropped by 12.4% and 43.3% respectively.

Inflation for 2016 is projected at between 4.75% and 4.9%, higher than the 0.6% rate of last year, mainly due to hikes in healthcare and education costs.

Meanwhile core inflation remained stable at around 2% as a result of continued drops in production input costs.

According to the NFSC, Vietnam’s economy will see some advantages in 2017 including higher global economic and trade growth projections, recovering global oil prices and a better business environment thanks to restructuring efforts since 2013.

But Vietnam could face headwinds from global uncertainties and the impacts of natural disasters and climate change.

The NFSC added that the US government’s decision to withdraw from the Trans-Pacific Partnership trade deal would affect the sentiment of foreign investors to some extent.

Nhan Dan