Making news

January marks auspicious start of 2019 for Vietnam’s economy

Keeping up the momentum from the previous year, the Vietnamese economy got off to a good start in 2019 with many robust macroeconomic indices in the first month.

According to the General Statistics Office (GSO), the index of industrial production (IIP) in January scored an expansion of 7.9 percent.

The growth, though much lower than 22.1 percent recorded in the same time last year, is rather strong in the context that production had been accelerated in December 2018 to serve consumption demand during Lunar New Year 2019 which falls in the beginning of February, the department said.

Another positive indicator is the increase in foreign direct investment (FDI) inflow.  Foreign investors registered 805 million USD in new FDI projects in the country, representing a climb of 81.9 percent year on year, according to statistics of the Ministry of Planning and Investment’s Foreign Investment Agency. In addition, 72 existing projects raised their capital by a total 340.3 million USD, resulting in 1.14 billion USD in the total FDI in the month, 27.3 percent higher than the same time in 2018.

Foreign investors also contributed capital to or bought shares of domestic firms worth a total 761.9 million USD in the month, up 114 percent year on year.

FDI disbursement was also impressive with a 9.2 percent increase to 1.55 billion USD.

Furthermore, retail and services sales rose 9.4 percent compared to 7.7 percent in January 2018. Strong purchasing power in the domestic market reflects the health of the economy, and is expected to stimulate the IIP in the coming months.

However, there are several challenges that should not be ignored.

Noticeable drops in the export earnings of several key commodities such as phones and spare parts, electronics, computers, coffee, cashew, rice and pepper, resulted in a trade deficit of 800 million USD in the month.

The Ministry of Industry and Trade said Vietnam is likely to see trade deficit return in 2019. A stable growth forecast for Vietnamese exports along with increasing FDI projects will mean rising import of materials, machines and equipment. Besides, the rising trend of trade protectionism in the world is expected to have damaging impacts on Vietnamese export revenue.

Another concern is the reduction of new firms established in January (10,079 as compared to some 11,000 one year ago). Meanwhile, the number of enterprises ceasing operation rose 25.3 percent to 10,804, and more than 1,800 firms completed dissolution procedures, up 16 percent from the same time last year.