Vietnam’s industrial production index rises 24.1pct y-o-y in Apr

20-May-2021 Intellasia | The Saigon Times | 5:02 AM Print This Post

Vietnam’s industrial production index increased by 1.1 percent month-on-month and 24.1 percent year-on-year in April thanks to robust external and recovering domestic demand, according to the World Bank’s “Vietnam Macro Monitoring May 2021″ report.

The high year-on-year growth rate was to a large extent due to the low base effect as production was hit hard by the Covid-19 pandemic-related lockdown in April 2020.

The continued expansion also reflected recovering domestic consumption in addition to solid external demand for hi-tech manufacturing products.

The most dynamic sub-sectors included beverage, clothing, home appliances, basic metals, electronics, computers, optical products and machinery.

Industrial production continued its solid expansion, while retail sales rebounded after two consecutive months of decline.

Retail sales grew by 2.3 percent month-on-month in April, reflecting the partial recovery of consumer demand from the third outbreak of Covid-19 in late January 2021. This rebound was driven by a 1.9 percent increase in the sales of goods, while services grew by 3.8%. However, the overall sales were still lower than in January.

The report also showed that merchandise trade continued to perform exceptionally well, driven by robust demand from the United States and other major trading partners.

The expansion of goods exports eased slightly by 3.4 percent month-on-month while imports continued to grow by 2.6 percent in April.

Over the first four months of 2020, exports and imports grew by 26 percent and 31 percent year-on-year, respectively. Trade expansion was fueled by the recovery in the US and China and to a lesser extent by the EU, Asean and South Korea.

Credit to the economy grew by 2 percent month-on-month, reflecting increased demand for credit as businesses responded to the stronger consumer demand during the national holidays in late April and early May.

The average overnight interbank interest rate also increased from 0.29 percent in March to 0.48 percent in April.

The consumer price index increased by 0.5 percent month-on-month, mainly driven by higher prices of consumer goods, including food, beverage, clothing, household supplies and appliances. This reflected the recovery of household consumption from the third local outbreak of Covid-19.

Prior to the fourth Covid-19 wave, which started in late April, mobility was improving fast, but it is deteriorating again with the new restrictions.

During most of April, most mobility indicators improved significantly as the third Covid-19 outbreak was brought under control. They also spiked at the end of the month as Vietnamese celebrated the second-longest national holidays in observance of National Reunification Day and International Labour Day. However, such indicators are deteriorating in May due to stronger mobility restrictions.

The World Bank warned that domestic economic activities will be affected by the fourth Covid-19 wave, especially those in sectors such as tourism, transport and retail, depending on the magnitude of the outbreak and how quickly the government will be able to bring it under control.

The government should consider boosting domestic demand by adopting a more accommodative fiscal policy, including increasing its support to the affected businesses and people.


Category: Economy, Vietnam

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