Initial estimates put Q2 real GDP growth at +6.7% y/y, slightly down from +6.8% in Q1. Agricultural output grew softer by +2.2% in Q2 (+2.8% in Q1). Meanwhile, the services sector increased stronger (by +6.9% after +6.5% in Q1) backed by robust wholesale and retail sales, indicating that private consumption was sound, supported by low inflation (2.2% y/y in June). Industry and construction growth also picked up in Q2 (to 9.1% from 8.7%) in part reflecting stronger external demand – real exports of goods and services increased by +7.3% in Q2 while nominal exports of goods rose by +9.3% y/y and +8.5% q/q. Notably, shipments to the U.S., Vietnam’s main export market, have surged this year, by +28% y/y in January-May. This compares to just +1.9% for the EU, the second largest export market. It appears that Vietnam has emerged as a beneficiary from the U.S.-China trade feud, with firms shifting production. However, this may not last for a long time as the U.S. administration has already noticed its rising trade deficit with Vietnam. Euler Hermes expects +6.6% GDP growth in 2019 (after +7.1% in 2018).
