Vietnam's Industrial Production Surges by 10.5% in First Half of 2018
Surging Growth in Vietnam's Industrial Sector
Vietnam's industrial sector has recorded a remarkable growth rate, with the index of industrial production (IIP) surging by 10.5% year-on-year in the first half of 2018, according to the latest report from the General Statistics Office (GSO).
Driving Forces Behind Vietnam's Industrial Expansion
This growth rate surpasses the 7% growth recorded in the corresponding period of the previous year, indicating a significant acceleration in industrial activity. The GSO attributes this robust growth primarily to breakthroughs in the processing and manufacturing sector, which witnessed an impressive 12.7% increase, contributing 9.7 percentage points to the overall IIP.
Key Players: Industries Fueling Vietnam's Economic Growth
Nguyen Bich Lam, the General Director of GSO, highlighted the pivotal role of the processing and manufacturing industry in driving overall economic growth. He emphasized that this sector, along with agro-forestry-fishery and services, contributed substantially to Vietnam's gross domestic product (GDP) growth, achieving the highest growth rate in the first half of the year since 2011.
Notable Trends: Winners and Losers in Industrial Production
Several manufacturing sectors within the secondary industry reported significant growth compared to the same period last year, including metal production (20%), coal and refined petroleum products (20.3%), electronics, computer, and optical products (17.5%), and medicine, pharmaceutical chemicals, and pharmaceutical material production (16.2%).
Challenges Ahead: Sustaining Vietnam's Industrial Growth
Key industrial products that experienced notable increases in production include raw steel and iron (43.7%), fabric (22.1%), sugar (19%), liquefied petroleum gas (18.5%), feed for seafood (17.8%), and televisions (17%). However, some sectors, such as wood processing and products made from bamboo, witnessed lower growth rates.
Outlook for Vietnam's Manufacturing and Processing Sector
In contrast, certain sectors reported declines in industrial production, including the stone-sand-gravel mining industry (-0.7%), repair-maintenance and installation of machinery and equipment (-2.7%), and crude oil and natural gas exploitation (-5.7%). Crude oil production, in particular, experienced a significant decline of 10.9%.
Despite the overall growth in industrial production, Lam cautioned about a downward trend in the IIP growth rate, with the first quarter of 2018 registering a 12.9% increase and the second quarter showing an 8.4% growth compared to the same period in 2017. Lam attributed this trend to various factors, including unfavorable weather conditions affecting the mining and petroleum industry, as well as reduced production by major players like Samsung Electronics Vietnam and Formosa Steel Corporation due to lower consumption.
Looking ahead, Vietnam's industrial sector is expected to face challenges in maintaining the growth momentum in the second half of the year. Nevertheless, continued efforts to stimulate industrial activity and address key challenges could bolster the resilience of Vietnam's manufacturing and processing sector in the coming months.
Reference: Vietnam Investment Review