Vietnam hit by worst drought in nearly a century

Vietnam's breadbasket southwestern region has been hit by the worst drought in 90 years, badly damaging the nation's economy.

 

The Southeast Asian country saw a huge slowdown in economic growth in the first quarter as agriculture output dropped sharply. GDP growth slipped to 5.6% year-over-year in the first quarter, down from 6.7% in 2015, according to statistics cited by a Capital Economics team led by Gareth Leader.

 

The drought, partially attributed to this year's El Niño, could also lead to a serious reduction in exports of major goods produced in the region, including rice, seafood, and coffee, according to Capital Economics.

 

Water levels in Vietnam's Mekong Delta, a region that accounts for 50% of the country's rice and fruit production, 90% of its rice exports, and 60% of shrimp and fish exports, are at their lowest levels since 1926.

 

Moreover, a report from the UN found that nearly 393,000 acres of rice in Vietnam have been lost, and an additional 1.24 million will likely be damaged by mid-2016. Those losses have already had huge effects on production: The first quarter of 2016 saw rice output fall by 6.2% year-over-year, which reduced Vietnam's total agricultural production by 2.7%, according to figures cited by Bloomberg.

 

And the immediate future for rice doesn't look much brighter. The chief executive officer of Intimex Group, a Vietnamese exporter of agricultural products, told Bloomberg that rice exports from Vietnam could drop by 10% this year.