Vietnam's economy accelerates despite dip in US exports, footwear drop

By Khanh Vu and Phuong Nguyen

HANOI, Oct 6 (Reuters) - Vietnam's economy accelerated in the third quarter, despite a 20% U.S. tariff in force since August 7 that is slowing Vietnamese exports to the United States, especially of footwear and textiles, government data showed on Monday.

Gross domestic product in the Southeast Asia nation rose 8.23% in the July-September period from a year earlier, accelerating from an upwardly revised 8.19% in the second quarter.

The acceleration supports the Vietnamese government's target of 8.3%-8.5% expansion this year, but appears at odds with forecasts from international organisations. The World Bank projects 6.6% growth this year, while the International Monetary Fund estimates 6.5%.

Growth was driven by foreign investment and rising exports, which continued to increase in the third quarter from a year earlier despite U.S. tariffs that took effect in early August.

However, monthly data showed a slowdown, with September exports down 1.7% from August. Shipments to the United States, Vietnam's main market, fell 1.4% compared to August, marking the second consecutive monthly drop, according to data from Vietnam's statistics agency.

FOOTWEAR EXPORTS TO US DOWN

Among industrial sectors that saw a drop in exports to the U.S., footwear was the hardest hit, recording a 27% drop in September from August, data from the customs department showed.

Vietnam is home to large manufacturing operations of big footwear multinationals, including Nike NKE.N, Adidas ADSGn.DE, and Puma PUMG.DE, which produce a large part of their global output of shoes through suppliers in Vietnam.

Textile and garment exports to the United States fell 20%, but rising shipments of coffee, chemicals and some electronics partly offset those losses.

Compared to a year earlier exports to the United States increased by 38%. Total exports over the July-September period rose 18.4% from a year earlier to $128.57 billion, while imports jumped 20.2% to $119.66 billion, resulting in a trade surplus of $8.91 billion, the statistics office said.

Industrial production rose 9.1% in the first nine months of this year from a year earlier, while foreign investment inflows rose 8.5% on the year to $18.8 billion, the highest in five years.

TOURISM, LENDING, CONSUMERS SUPPORT GROWTH

Vietnam's stock market .VNI rose 2% on Monday after the economic data was released.

Growth was helped by a booming tourism sector, with foreign arrivals to the country in the first nine months of this year up 21.5% compared to the same period in 2024, for a total of 15.4 million.

A splurge in lending is also supporting economic expansion, with the central bank expecting credit to increase by 19% to 20% this year.

Retail sales increased 11.3%, while consumer prices in September rose 3.38% from a year earlier, below a target of 4.5% to 5.0% this year.