Strong results supporting production

The General Statistics Office (GSO) last week reported that in August, “Vietnam’s industrial production continued its quick trend of recovery”, with the index for industrial production (IIP) increasing 2.9 per cent on-month and 15.6 per cent on-year thanks to enterprises strongly expanding production to offset their delayed production in the past two years.

Industrial production continues to increase, fuelling economic growth, Le Toan

In the first eight months of this year, the IIP is estimated to climb 9.4 per cent on-year, in which the manufacturing and processing sector creating over 80 per cent of industrial growth expanded 16.2 per cent as compared to the same period last year.

This 8-month IIP is higher than the 2.2 and 5.5 per cent on-year rise in 2020 and 2021, respectively.

According to the Ministry of Industry and Trade’s fresh forecast, if the IIP increases 9.8 per cent in the third quarter and 10.3 per cent in the fourth quarter, it will be about 9.5 per cent for the whole year.

Growing production has led to the growing demand for electricity and fuel – the vital inputs for the economy. The GSO reported that the Vietnamese economy’s production and distribution of electricity in August increased 14.8 per cent on-year. In the first eight months, the rate increased 6.8 per cent against the same period last year, when it decreased 6.6 per cent on-year.

State-run Electricity of Vietnam (EVN) reported that all of its activities were going up on-year in the first eight months of this year. Its gross output of industry is estimated to be over $11.3 billion, up 5.97 per cent, while the produced and purchased electricity volume is estimated to be 176 million kWh, an on-year rise of 5.9 per cent, with commercial electricity is estimated to be 160.5 million kWh, up 5.9 per cent on-year.

In which, electricity for agro-forestry-fishery climbed 2.3 per cent, while the rate is 6 per cent for construction and industrial activities, 3.5 per cent for households, and 21 per cent for trade and hotels.

EVN’s total 8-month revenue from electricity sales is estimated to be around $13.1 billion, up 7.57 per cent on-year.

In another case, state-owned Vietnam Oil and Gas Group (PetroVietnam) reported that its total revenues in the first eight months is estimated to be $21.96 billion, up 53 per cent as compared to the corresponding period of last year.

The group exploited 7.28 million tonnes of crude oil, down 1 per cent on-year; produced 1.2 million tonnes of nitrate – up 9 per cent, and nearly 4.54 million tonnes of assorted petrol and oil products – up 6 per cent. In terms of on-year sales, PetroVietnam’s assorted petrol and oil products increased 11 per cent, fertiliser 26 per cent, and condensate 122 per cent.

PetroVietnam’s 8-month export turnover is estimated to be $1.96 billion, up 57 per cent as compared to the same period last year.

According to the GSO, enterprise confidence has been rising for almost a year. In the first eight months of this year, the economy saw over 101,000 newly-established enterprises with total registered capital of $49.4 billion, employing around 696,000 new labourers – up 24.2 per cent in the number of enterprises, 0.3 per cent in capital, and 16.2 per cent in the number of labourers as compared to those in the same period of last year.

If an additional $108.78 billion registered by over 35,000 in-run enterprises is included, the total registered capital inserted into the economy in the period is $158.2 billion, up 36.1 per cent on-year.

What is more, the first eight months also saw just over 48,000 enterprises resume operations, up 48.3 per cent on-year, raising the total number of newly-established firms and those resuming operations to nearly 149,500 – up 31 per cent as compared to the corresponding period of last year.

GSO general director Nguyen Thi Huong underlined foreign direct investment (FDI) as one of the key drivers of economic growth.

In the January-August 20 period, total newly-registered FDI hit $6.35 billion, down 43.9 per cent on-year. However, the total newly-added FDI of 676 operational projects reached $7.51 billion, up 50.7 per cent on-year; and FDI from stake acquisitions and capital contributions sat at $2.92 billion – up 2.6 per cent on-year.

“Meanwhile, disbursement reached $12.8 billion, an on-year rise of 10.5 per cent. This is the highest 8-month realised figure over the past five years,” Huong said.

Global analysts FocusEconomics last week told VIR that following the second quarter’s surprisingly strong performance, the economy should be accelerating further and reaching a double-digit growth rate in the third quarter.

“Our panellists expect GDP to expand 7.3 per cent in 2022 and 6.6 per cent in 2023,” FocusEconomics said.

In its latest Global Research report on Vietnam, Standard Chartered Bank anticipates Vietnam’s economy will see a continued recovery, as the economic revival has shown signs of broadening. The bank maintains its GDP growth forecast of 10.8 per cent on-year in the third quarter and 3.9 per cent in the fourth quarter, taking 2022 growth to 6.7 per cent.

“The recovery may accelerate markedly in the second half of the year as tourism rebounds. That said, rising global oil prices may have negative consequences on the economy,” said Tim Leelahaphan, economist for Thailand and Vietnam at Standard Chartered Bank.

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