Nov 30, 2012

Vietnam - Industry remains sluggish, inventories high

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Industrial production continued to see low growth in November with the nation's Index of Industrial Production (IIP) increasing just 4.8 percent over October, according to the General Statistics Office (GSO).

The index for the first 11 months has risen by just 4.6 percent over the same period last year.

The IIP growth rate this year has been much lower than in corresponding periods in 2011 and 2010, said GSO expert Vu Quang Ha, noting that the IIP rose 6.9 percent last year and 9 percent in 2010.

The slowing trend was attributed to impacts of the global recession which has lowered domestic purchasing power as well as demand in major export markets, such as the US, EU and Japan.

In specific industries, electrical generation and distribution saw a growth of 12.4 percent, and water supply and treatment grew by 8.1 percent during the 11-month period, but manufacturing and processing industries – which account for over 70 percent of all industrial production value – grew by only 3.9 percent. The mining industry saw a similarly sluggish 4 percent growth.

It was even worse for a number of leading export-driven sectors. The textile and garment industry saw a growth of only 3.4 percent, while the wood products grew by only 1.9 percent. Negative growth was seen in some sectors even saw, including footwear (down 0.6 percent), cement (down 6.2 percent), paper (down 9 percent) and machinery (down 14 percent).

The low figures reflected the stagnation in many of these industries, which have seen many production facilities closed and many enterprises liquidated.

Among the few bright spots, the manufacturing of telecommunications devices saw rapid growth of 50.4 percent in the first 11 months of the year, while electronics grew by 18.3 percent, pharmaceuticals by 15.3 percent and crude oil production by 11 percent. The consumption index of products of manufacturing and processing industries during the first 11 months lagged behind the production index. October saw the consumption index at a 10-month low of only 3.3 percent.

Due to weak consumption, inventories continued high, with no improvement since August. As of November 1, the inventory index was 20.9 percent. Telecommunications devices, fertiliser, motorbikes, tobacco, cement, paper and fisheries were among those with high inventories.


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