Purchasing power of Vietnamese people has not recovered since the start of this year. Although interest rates have decreased, borrowing demand was still low on poor consumption. These adverse factors have had a significant impact on product prices, goods and service consumption, as well as production and business activities and development investment programmes of enterprises. However, in the third quarter of this year, the slightly increased index of industrial production and reduced inventory show the effect of the Government’s efforts.
Decreased inventories
The Ministry of Industry and Trade said the index of industrial production (IPP) rose 5.4 percent in the first nine months of 2013, higher than 4.8 percent in the same period of 2012. As of end-August 2013, the total consumption index of processing and manufacturing industries climbed 10.1 percent year on year. High growths were seen ready-made apparels, leather, footwear, rubber, plastic, electric equipment, and engineer vehicles, estimated to soar 20 percent or higher.
The inventory index of processing and manufacturing industries gradually declined month after month, from 21.5 percent from a year earlier on January 1, 2013, to 9.7 percent on June 1 and 9.3 percent on September 1. Thus, the inventory index dropped 12.2 percentage points from January 1 to September 1, 2013.
The inventory index of processing and manufacturing industries in September 2012 rose 20.4 percent over September 2011 but the index in September 2013 was only 9.3 percent higher than that in September 2012. The growth was half as much as in the same period in 2012. Sharply reduced inventories were seen in cement, electronic equipment, communication equipment, motor vehicle, foodstuff and clothing.
The inventory index has fallen sharply while the consumption index tends to increase. However, slowly-growing IPP showed that the decline in the inventory index was perhaps not caused by good consumption, but production shrinkage.
Slow growth
Industrial production in the first nine months of 2013 expanded more than that in the same period of 2012, but much less than in previous years, indicating continuing difficulties in processing and manufacturing industries. Nevertheless, the monthly growth of processing and manufacturing industries and the growth of the power sector are signs of recovery.
The higher growth of some sub-sectors in manufacturing and processing industries eased the overall weakening, particularly key forex earners like apparel, footwear, electrical equipment and motor vehicles. This indicated that domestic and foreign market development played an important role in promoting production development.
Extractive industries slumped, particularly coal, stone, sand, gravel and clay, showing that the real weakening production resulted in lower demand for inputs and materials.
One major difficulty for current industrial production remains consumption, resulting in limited investment for production development by enterprises. Some industries like garment and footwear confronted difficulties in input supplies caused by fierce completion from other countries. Suppliers took advantage of input shortage to delay deliveries and push up prices by 10 - 15 percent. Therefore, while strengthening their leading position in traditional export markets and further expanding potential markets, enterprises need to proactively prepare resources, and invest in equipment and technology for industrial development.
Huong Giang
Vietnamese
