Increased input imports stoke industry recovery

The General Statistics Office (GSO) last week reported that the country’s two-month IIP surged 5.4% year-on-year.

The IIP in February 2014 fell by 10.3% from the previous month but still increased by 15.2% against the same period last year.

The modest increase shows a recovery in the domestic economy’s production sector, according to a Ministry of Planning and Investment (MPI) report.

Meanwhile, in the first two months of year, Vietnam’s export turnover was estimated to have hit US$21.06 billion, up 12.3% year-on-year.

Garment and textiles and phones remained the most popular exports, earning US$1.3 billion and US$1.6 billion, respectively.

“Despite the quiet long lunar new year holiday, such figures are considered quite high, which mirrors the better performance of domestic business,” said economist Le Dinh An, former director of the National Centre for Socio-Economic Information and Forecasting under the MPI.

In 2013, exports were considered the main motive force for economic growth to reach 5.42% and economists predicted the trend would continue this year.

Although the government only targeted export growth of 10% or a US$13 billion year-on-year increase in 2014, it was very likely to exceed targets, he added.

However, the country imported commodities worth some US$20.82 billion, up 17% year-on-year with a sharp increase for some production inputs. Specially, cloth imports rose by 26.7% or a US$270 million rise, machines and equipment grew by 39.2% or US$941 million, raw materials rose 39.4% or US$175 million and plastic products increased 36.8% or US$123 million.

“For an economy which depends on imported inputs, these figures indicate enterprises are preparing production plans based on better orders,” said Bui Ha, director of the Department of General Economic Issue under the MPI.

Economist Tran Du Lich said that with such positive indicators, the economy is showing signs of recovery but still facing many challenges.

The economy still saw quite slow growth in the domestic market with weak demand in the past two months. In February, the total retail sales of consumer goods and services experienced a 2.28% decrease compared to January 2014.

The GSO also reported that the Consumer Price Index (CPI) rose by just 0.55% in February month-on-month and 4.65% over a year earlier, marking the lowest price hike in the past 10 years, mainly off the back of decreased demand.

Some 13,100 enterprises stopped operations in the first two months, up 12.2% year-on-year, up on the 8,600 recorded during the same period in 2013, according to the MPI.