Industrial sector continues being the key driver of economic growth

September 06, 2019 | 11:58
(0) user say
Industrial growth should remain elevated and a key driver of economic growth going forward, spearheaded by a burgeoning manufacturing sector, especially electronics and mining.

Over recent weeks the domestic market has witnessed Samsung begin marketing its Galaxy Note 10 and Galaxy Note 10+ smartphones, the latest flagship devices of the South Korean conglomerate.

The products come with upgraded specifications and 5G support, Samsung said, with a suggested retail price of VND22.99 million ($1,000) and VND26.99 million ($1,170) for the Note 10 and 10+, respectively.

According to the General Statistics Office (GSO), Samsung’s latest move in Vietnam has contributed to boosting the country’s eight-month manufacturing activities, in which production of mobile phones increased by 11 per cent, and that of smartphones rose 15.8 per cent on-year. Samsung takes the lead in production and export of these products in Vietnam.

“Samsung has been making considerable contributions to domestic manufacturing and exports since early this year,” said GSO head Nguyen Bich Lam.

Exports of mobile phones and their spare parts touched $33 billion, occupying 19.4 per cent of Vietnam’s total export turnover, and up 37.8 per cent on-year, higher than a rise of 15.7 per cent on-year in the same period last year. Besides that, exports of computers and their spare parts reached $21.9 billion, up 14.3 per cent on-year.

Key electronics producers and exporters in Vietnam include Samsung, LG, and Canon.

“Samsung’s products will greatly support the domestic phone manufacturing industry to develop stronger in the third and fourth quarters of the year, when the Thanksgiving and Christmas holidays are peak shopping seasons in the country,” stated a report by the Ministry of Industry and Trade. “Currently the business and production plans of Samsung and LG in Vietnam are going well.”

According to the GSO, a rise in production and exports of electronics items have contributed greatly to a climb in the country’s eight-month manufacturing industry, which accounts for 80 per cent of industrial growth and will will help drive the economy’s growth.

Global analysts FocusEconomics has released its latest forecast for Vietnam’s economic outlook, stating that the economy will expand 6.7 per cent in 2019, making itself one of the region’s star performers this year.

The firm stated that Vietnam’s economic growth continuing will largely depend on industrial growth driven by a climbing manufacturing sector.

“Vietnam is an attractive low-cost base for manufacturing firms, including those looking to relocate from China due to the US-China trade spat,” the firm stated in a September bulletin sent to VIR. “FocusEconomics Consensus Forecast participants estimate that industrial output will grow 9.1 per cent in 2019, which is up 0.2 percentage points from last month’s forecast. For 2020, panellists expect industrial production to expand 9.0 per cent.”

Also seeing Vietnam with a bright outlook, global data provider TradingEconomics last week stated that industrial production in Vietnam is expected to rise 8.3 per cent by the end of this quarter, and 8 per cent in 12 months’ time. In the long term, the Vietnamese industrial production is projected to trend around 6.9 per cent in 2020 due to uncertainties in the global market which will affect Vietnam’s economy.

According to the GSO, in the first eight months of this year, the economy’s index for industrial production rose 9.5 per cent on-year, lower than 10.8 per cent in the same period last year, but higher than the rise levels of 8.2 and 7.2 per cent in the corresponding periods of 2017 and 2016.

The manufacturing sector rose 10.6 per cent, lower than the on-year climb of 13.1 per cent in the same period last year, but higher than the rise levels of 10 and 9.7 per cent in the corresponding periods of 2017 and 2016.

Notably, FocusEconomics, TradingEconomics, and the GSO noted that Vietnam’s mining sector is on the rise, contributing considerably to a rise in manufacturing.

Specifically, the mining sector grew 2.5 per cent on-year as compared to a reduction of 0.3 per cent in the first eight months of last year.

industrial sector continues being the key driver of economic growth
The strongly developing industrial sector, especially electronics, continues serving as the key impetus for economic growth export

In the first seven months of 2019, Vietnam Oil and Gas Group’s total revenue hit VND432.7 trillion ($18.8 billion), exceeding by 11.8 per cent as compared to the initial plan, and up from VND332.2 trillion ($14.4 billion) reaped in the same period last year.

This year, the group has set a target of exploiting 12.37 million tonnes of crude oil and 9.36 billion cubic metres of gas, while producing 21.6 billion kilowatt-hours of power, 1.575 million tonnes of nitrate, and 11.35 million tonnes of petrol. Total revenue is expected to be VND612.2 trillion ($26.6 billion)

The GSO reported that production of refined petroleum and gasoline increased by the eight-month highest level of 40.9 and 42.9 per cent on-year, respectively, while production of metal and rubber also soared 40.2 and 15.2 per cent on-year, respectively.

In the first eight months of 2019, the Vietnamese economy saw the establishment of 90,500 enterprises with total registered capital of VND1.15 quadrillion ($50 billion), up 3.5 per cent in the number of enterprises and 31 per cent in capital. In which, the number of those operating in the manufacturing sector was 24,500, or 27 per cent of total, ranking second after the service sector with the number of newly-established enterprises being 64,700, or 71.6 per cent of the total.

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional