Production records growth decline

According to the Ministry of Planning and Investment (MPI), the economy has grown 5.46% in this year’s first quarter, lower than the 6.12% growth rate in the first three months of last year.

“The first quarter’s economic situation is not positive. Many sectors have witnessed a decline in production growth”, said Nguyen Phu Ha, head of the MPI’s Department for National Economic Issues.

The index for industrial production (IIP) in the first quarter has climbed only 6.3%, compared to a 9.1% rise in the same period last year.

Many sectors with decreased production include footwear (down 3.7% year-on-year), clothing (4.3%), cigarettes (5.3%), and mobile phones (17.6%).

In the first three months of 2016, the total revenue for retail and consumption service has climbed 9/1%, down from a 10% increase in the first quarter of last year.

The Nikkei Manufacturing Purchasing managers’ Index also slumped from 51.5 in January to 50.3 in February. Nikkei stated that “the Vietnamese manufacturing sector saw growth weaken in February as fragile global demand conditions hampered efforts to sustain the momentum gained at the start of the year.

Nguyen Thuy Hien, vice head of the Ministry of Industry and Trade’s Planning Department, attributed the less optimistic economic picture to weak local production, especially in natural resource exploitation and exports, as well as the generation of electricity used for industries and construction.

Specifically, in the first quarter, crude oil exploitation reached 4 million tonnes, down nearly 4% as compared to a rise of 10% in last year’s first three months. Exports of crude oil also lowered 20% in quantity and 52.8% in turnover.

Additionally, exports of coal slumped 92% in volume and 93.3% in turnover.

Notably, in this year’s first three months, imports of machinery and equipment in production services hit nearly US$6 billion, down 14.1% year-on-year.

In addition, the production of power used for industry and construction rose 9%, far lower than the 18% climb in the first three months of last year.

“These figures strongly indicate that local production has shrunk”, Hien said.

“Power is the main feed for production, but generation of power has declined. This year, enterprises have encountered lots of difficulties in general”, she added.

According to the MPI, the number of enterprises forced to halt operations in the first quarter of 2016 reached more than 20,000 up 24% year-on-year. Meanwhile, in the same period last year, the figure was just over 16,000, up 14.2% year-on-year.

The MPI also reported that in this year’s first quarter, drought and saline inundation in the country’s southern region hit the agricultural sector seriously, with agricultural production down 2.6% year-on-year.

It is estimated that the rice output in the Mekong Delta region decreased 6.2%, or nearly one million tonnes, in this year’s first three months, as compared to the same period last year.