Production rise hints at recovery

The index of industrial production (IIP), in the first seven months, registered the highest growth rate so far this year, noted the GSO, compared to 3% in January, 5.4% in the first two months of the year, 5.2% in the first quarter and 5.8% in the first half of the year.

The IIP during Jan-July 2014 is also higher than the IIP during the same period last year, according to the GSO.

The office attributed the high IIP growth rate to the 8.1% surge in the processing and manufacturing sector, which accounted for 70% of total industrial output.

Industrial products with the highest growth rate in the period include mobile phones, with 77 million units, up 37.8%, rolled steel with 2 million tonnes, up 23.8%, television with 1.8 million, up 23.3%, shoes with 150.4 million pairs manufactured; and electric output with 72.3 billion Kwh, up 11.9%.

Meanwhile, other products that reported lower growth rates include steel, at 1.7 million tonnes, up 0.8%, and NPK fertiliser, with 1.4 miilion tonnes, up 1.4%.

Some products with declining output included motorbikes, with 1.85 million units, down 12.9%, liquified petro gas (LPG) with 365,000 tonnes, down 10.7%, crude oil with 8.7 million tonnes, down 1.9%, and chemical paint with 275 tonnes, down 1.2%.

GSO experts attributed the low consumption to a slow rebound of the world economy, as well as low demand in the domestic market and a high inventory index.

The July 1 inventory index of the processing and manufacturing industry posted a month-on-month increase of 12.8% and a year-on-year surge of 13.2%.

Other sectors reporting higher inventories than the same period last year were electronics, computers, tobacco products, medicines, pharmaceutical products and materials, leather, and paper.

Business optimism

Although the Vietnamese economy is facing numerous difficulties, many businesses are said to be hopeful about business activities in the second half of this year.

Businesses, further, estimated that profits would increase by three points in the first six months of this year. Although this growth is modest, it shows progress in production and trading, according to the Vietnam Chamber of Commerce and Industry (VCCI)'s survey of 800 outstanding businesses nationwide.

The survey also indicates that most domestic businesses felt good about the level of access to market information, technology and the demand in the international market.

They also said it is easier to obtain loans in the first six months of this year, as a result of lower interest rates and greater transparency of loan procedures.

Businesses added that their total revenue growth increased from 0.3 points in the last six months of last year to eight points in the first six months of this year, causing them to be optimistic about increased employment, in the short term.

Meanwhile, according to the Vietnam Academy of Social Sciences' Centre for Analysis and Forecasting, several macro economic factors would be affected in the final six months of this year, particularly investments, exports and imports, and the monetary market, which were likely to impact economic growth.

However, experts said that with timely response measures and effective implementation of newly-amended laws, it is expected that production and trading will help mitigate negative impact on the economy in the second half of the year.