Vietnam's economy picked up speed in Q2 due to strong export performance, according to government data released on Saturday. However, the country continues to face the challenge of increasing inflation. 

The General Statistics Office (GSO) reported that Vietnam’s GDP likely grew by 6.93% year-on-year in the second quarter, up from 5.87% growth in the first quarter. 

The GSO went on to add that the country’s economy grew 6.42% in the first half of 2024, Reuters news agency reports. 

Vietnam, known for exporting smartphones, electronics, and garments, aims to bolster business activity following a year where it missed its growth target due to subdued global demand and power shortages.

“Vietnam's socio-economic situation continues a positive trend, with each quarter being better than the previous one,” said a GSO statement. 

“The country's economy and society continue to face many difficulties and challenges, amid external risks and uncertainties ... achieving the growth target of 6.0-6.5% in 2024 is a big challenge, requiring the joint efforts from all forces,” the GSO went on to say. 

Furthermore, according to the GSO, Vietnam's exports in the first half of this year surged by 14.5% year-on-year to $190 billion, while industrial production also grew by 10.9% compared to the previous year. 

Last week Prime Minister Pham Minh Chinh said Q2 GDP growth would surpass that of Q1, and growth would continue to be a priority in order to reach the target this year of 6.0%-6.5%. 

Chinh stated that Vietnam intends to maintain its flexible monetary policy, focusing on further reducing banks' lending interest rates, decreasing fees, and increasing public investment.

In addition, the International Monetary Fund forecasts Vietnam's economic growth to be around 6% this year, bolstered by robust external demand, resilient foreign investment, and supportive policies.  

However, the IMF has cautioned about significant downside risks. 

Indeed, it highlighted that prolonged exchange rate pressures could potentially result in a more pronounced impact on Vietnam's domestic inflation, especially in light of the current accommodative monetary environment.