Vietnam posts decade-high growth of 7.1% in 2018

A big screen shows information of Vingroup's Vsmart phones, during the launch of Vsmart smartphones, at the Vincom Centre Landmark 81 in Ho Chi Minh on Dec 14 this year. (EPA-EFE)

Vietnam's growth soared to more than 7% this year, its highest in a decade, helped by a surge in its manufacturing sector.

The country has long been one of Asia's fastest-growing economies -- GDP growth topped 5% over the past five years -- largely driven by the exports of cheap manufactured goods, from Nike shoes to H&M T-shirts, as well as tech products like Samsung phones and Intel computer processors.

But this year's growth surpassed the communist government's target of 6.7%, hitting 7.08%, according to figures released Thursday by the General Statistics Office in Hanoi.

"The processing and manufacturing sector was the bright point and the main driver for the overall growth" with a 12.98% increase, said GSO head Nguyen Bich Lam.

He added the economy would remain robust next year with the expected contribution of manufacturing projects such as Vinfast, a local car assembly company owned by Vietnam's largest private conglomerate Vingroup.

Run by Vietnam's richest man Pham Nhat Vuong, Vingroup also recently unveiled its first made-in-Vietnam mobile phones in an effort to gain a slice of the lucrative market.

However, the World Bank predicted a slowdown over the next two years if Vietnam does not protect itself from escalating global trade tensions.

"As an open economy, Vietnam needs to maintain a responsive monetary policy, exchange rate flexibility and low fiscal deficits to enhance its resilience against potential shocks," said Sebastian Eckardt, the bank's lead economist for Vietnam.

A bruising trade war between the US and China has caused reverberations around the region, as Washington and Beijing have slapped tit-for-tat tariffs on more than $300 billion worth of goods.

But relations have eased after both sides agreed to a 90-day truce earlier this month.