Macro Report

Q2 GDP increased by 6.71% YoY, the lowest growth rate in eight quarters. Slower growth of the Manufacturing and Algriculture industries, which have the largest proportion in the economy, was the main reason for GDP deceleration. Some sectors of the Services and Construction industries maintained stable growth, and along with the positive growth of the Minning sector, helped GDP not decline too deeply.

Different from being the strong economy of the US when the first trade war broke out in July 2018, it showed signs of slowing down when the second trade war happended in May 2019. Employment data was lower than expected and the inflation rate was far from the target of 2%, raising the forecast that Fed will lower interest rates in the meeting at the end of July 2019. US Government bond yields fell sharply, for all terms, with the 10-year bond yield close to 2% at the end of June 2019.

The increase of 9.3% YoY was not low compared to the first few months of 2019 as well as the same period of 2018. In the first four months of 2019, however, the total IIP grew by 9.2% YoY, significantly lower than 11.2% in the same period of 2018. The components of growth in 2019 changed only slightly since the Mining and quarrying sector remained fairly flat (4M 2018: -1.2% YoY). The Manufacturing sector grew at a relatively slow pace of 10.9% YoY (4M 2018: +14% YoY).

Agriculture in the first two months of the year faced difficulties in both market situation and prices. Exports of key agricultural products, such as rice, vegetables, and coffee, decreased compared to the same period last year. Rice exports in the first two months decreased by 17.5% YoY (first two months of 2018: +30,5% YoY). Vegetables decreased by 14.4% YoY (first two months of 2018: +54.6% YoY). Coffee decreased by 26.9% YoY (first two months of 2018: -0.5% YoY)