Industry remains sluggish, inventories high

The index for the past 11 months has risen by just 4.6 percent over the same period last year.

The rate of increase in the IIP this year has been much lower than in comparable periods in 2011 and 2010, said GSO expert Vu Quang Ha, noting that the IIP rose 6.9 percent last year and 9 percent in 2010.

The low industrial growth was due to the impact of the global recession which has lowered domestic purchasing power as well as demand in major export markets, such as the US, EU and Japan.

In specific industries, electrical generation and distribution grew 12.4 percent, water supply and treatment, 8.1 percent, but manufacturing and processing industries, which accounting for over 70 percent of all industrial production value, rose only 3.9 percent. The mining industry achieved a similarly anaemic four-percent growth.

For a number of leading export-driven sectors, it was even worse. The garment industry saw rapid growth of 3.4 percent, while the wood product processing industry grew 1.9 percent. Some sectors even saw negative growth, including footwear (down 0.6 percent), cement (down 6.2 percent), paper (down 9 percent) and machinery (down 14 percent).

The low figures reflected the stagnation in many of these industries, which have seen many production facilities closed and many enterprises liquidated.

Among the few bright spots, the manufacturing of telecommunications devices saw rapid growth of 50.4 percent, while electronics grew 18.3 percent, pharmaceuticals, 15.3 percent, and crude oil production, 11 percent.

The consumption index of products of manufacturing and processing industries lagged behind the production index. October saw the consumption index at a 10-month low of only 3.3 percent.

Due to weak consumption, inventories continued high, with no improvement since August. As of November 1, the inventory index was 20.9 percent. Telecommunications devices, fertiliser, motorbikes, tobacco, cement, paper and fisheries were among those with high inventories.