Confidence consolidated with industrial production recovery

The General Statistics Office last week reported that Vietnam’s industrial production in 2024 rose on the back of growing demand both at home and abroad.

Workers examine electronic circuit boards at a Republic of Korea-invested company in the Yen Phong Industrial Park in Bac Ninh province. (Photo: VNA)

The index for industrial production (IIP) for November continued a positive trend, with an estimated increase of 2.3 per cent on-month and 8.9 per cent on-year. In the first 11 months of this year, the IIP is estimated to have risen 8.4 per cent compared to the corresponding period last year, when the index ascended only 1 per cent on-year.

The 11-month IIP of the manufacturing and processing sector rose 9.7 per cent, versus a very low expansion of 1.1 per cent in the same period last year; the index of the waste and wastewater management and treatment sector rose 9.6 per cent on-year; and the electricity production and distribution industry grew 10.2 per cent on-year.

According to the GSO, based on such a positive trend in industrial production recovery, it can be declared that the IIP growth target for the whole year of 7-8 per cent can be reached, with enterprises’ confidence being increasingly consolidated.

Prime Minister Pham Minh Chinh last week said, “We’re happy to see that domestic industrial production is positively recovering, continuing to act as an important driver of economic growth.”

The industrial, construction, and service sector is creating about 80 per cent of GDP. The agro-forestry-fishery sector holds 11.64 per cent, while others are responsible for the rest.

Development of enterprises has continued staying on an uptrend. In November, 18,900 businesses were newly established and resumed operations, raising the 11-month figure to 218,500.

The Ministry of Industry and Trade (MoIT) has attributed the rosy situation to the country’s macroeconomic stability backed by the government’s supportive policies for enterprises and individuals to expand production and business, and export activities.

“The positive industrial production recovery has also been fuelled by the economic growth foundation since late last year. It is now continuing the key propellant for economic growth,” the MoIT said.

In October, the Purchasing Managers’ Index, an indicator of the prevailing direction of economic trends in the manufacturing and service sectors, hit 51.2 points, up from 47.3 points in September, demonstrating that the economy’s industrial production has been rapidly recovering after Typhoon Yagi in early September. New production output and orders have been on the rise, especially at the end of the year.

It is estimated that in the first 11 months of this year, total goods export-import turnover stood at around $715.55 billion, up 15.4 per cent on-year, with a trade surplus of more than $24.31 billion. The year is expected to see total goods export-import value reaching a record sum of about $807.7 billion.

Analysts at FocusEconomics said that they expected Vietnam’s merchandise exports to rise 9 per cent in 2025 and 5.5 per cent in 2026. The country’s merchandise imports are forecasted to rise 10.9 per cent in 2025 and 4.6 per cent in 2026, with a potential trade surplus of $34.1 billion in 2025 and $39.8 billion in 2026.

Vietnam’s GDP growth accelerated to 7.4 per cent in the third quarter from 7.09 per cent in the second quarter, marking the highest reading since the third quarter of 2022. The industrial sector, fuelled by manufacturing, and an improved services sector performance amid robust external demand, drove GDP growth. It is expected the economy will grow 7.4-7.6 per cent in the fourth quarter of this year, spurred on by manufacturing.

“Our panel forecasts GDP growth to accelerate in 2025 from 2024’s projection and remain among the fastest in ASEAN. An improvement in fixed investment growth, paired with healthy expansions in both private and public consumption, will underpin momentum,” FocusEconomics said. “Additional extreme weather events plus full-blown regional war in the Middle East are downside risks. We see Vietnam’s GDP expanding 6.5 per cent in 2025, and 6.4 per cent in 2026.”

According to Suan Teck Kin, an economist at United Overseas Bank, for 2024, GDP growth will be lifted by the cumulative year-to-date performance, which has already reached 6.8 per cent on-year.

“We thus revise up full-year forecast to 6.4 per cent (versus previously lowered projection of 5.9 per cent), which is close to the upper end of official growth target of 6.0-6.5 per cent,” Kin said.

“Growth forecast for 2025 is maintained at 6.6 per cent, to reflect an expected ramp up in output early next year to compensate for the earlier losses as a result of Typhoon Yagi, as well as spillover effects from US Fed’s policy easing and China’s stimulus measures,” he continued.

Hanoi’s industrial production shows promising growth The capital city of Hanoi has seen thriving industrial production, especially in the processing and manufacturing sector, with local businesses working to seize opportunities to accelerate growth toward the year end.

Key balances maintained for industrial production Domestic industrial production in Vietnam continues on a recovery trajectory, bolstered by a rise in electricity consumption and growing business confidence.