Manufacturing on uptrend driving economic growth

Thursday, 2019-08-29 18:42:02
 Font Size:     |        Print

Optimistic industrial growth continues spurring economic growth
 Font Size:     |  

NDO - Vietnam’s industrial growth is pushing ahead, continuing to be a key propellant of economic growth over the past eight months, with a climb in the manufacturing sector, notably in mining and feed production.

Spain-based FocusEconomics, which provides in-depth economic analysis globally, has just released its latest forecast for the Vietnamese economic outlook, saying that the economy will grow by 6.7% in 2019, making itself one of the region’s star performers this year.

FocusEconomics stated that Vietnam’s economic growth will continue significantly relying on industrial growth driven by a growing manufacturing sector.

“Vietnam is an attractive low-cost base for manufacturing firms, including those looking to relocate from China due to the US-China trade spat,” the firm stated in a September bulletin. “FocusEconomics Consensus Forecast participants estimate that industrial output will grow 9.1% in 2019, which is up 0.2 percentage points from last month’s forecast. For 2020, panelists expect industrial production to expand 9.0%.”

Also another upbeat prediction in regards to Vietnam’s bright economic prospects, global data provider TradingEconomics has stated that industrial production in Vietnam is expected to rise 8.3% by the end of this quarter, and 8% in 12 months’ time. In the long term, the Vietnamese industrial production is projected to trend around 6.9% in 2020 due to uncertainties in the global market which will affect Vietnam’s economy.

Notably, FocusEconomics and TradingEconomics noted that Vietnam’s mining sector is rising, considerably contributing to a rise in manufacturing, which accounts for 80% of the country’s industrial growth.

According to the Vietnamese General Statistics Office (GSO), in the first eight months of this year, the economy’s index for industrial production ascended 9.5% on-year, lower than 10.8% in the same period last year, but higher than the increases of 8.2% and 7.2% in the corresponding periods of 2017 and 2016.

The manufacturing sector went up by 10.6%, lower than the on-year expansion of 13.1% in the same period last year, but higher than the rises of 10% and 9.7% in the corresponding periods of 2017 and 2016.

Notably, the mining sector grew by 2.5% on-year as compared to a decrease of 0.3% in the first eight months of last year.

In the first seven months of 2019, Vietnam Oil and Gas Group’s (PetroVietnam) total revenue hit VND432.7 trillion (US$18.81 billion), surpassing by 11.8% as compared to the initial projection, and up from VND332.2 trillion (US$14.43 billion) harvested in the same period of 2018.

This year, PetroVietnam has set a goal of exploiting 12.37 million tonnes of crude oil and 9.36 billion cubic metres of gas, while producing 21.6 billion kilowatt-hours of power, 1.575 million tonnes of nitrate fertiliser, and 11.35 million tonnes of petrol. The total revenue is expected to be VND612.2 trillion (US$26.62 billion).

The GSO reported that production of refined petroleum and gasoline increased by the eight-month highest level of 40.9 and 42.9% on-year, respectively, while production of metal and rubber also soared 40.2 and 15.2% on-year, respectively. Aquatic feed also increased by 14.6% on-year.

For example, Australian-backed aquatic feed maker Mavin Group last month was granted to build a US$30 million aquatic farm in the southern province of Kien Giang, on a sea surface area of 2,000 hectares.

This investment will raise the total capital invested by Mavin in Vietnam to US$150 million. In May 2018, Mavin also inaugurated a US$30 million feed mill in the Mekong Delta province of Dong Thap.

In the near future, Mavin may invest another US$50 million into three other projects in Kien Giang.

In another case, US-backed animal feed producer Cargill is also expected to continue investing more in Vietnam’s animal feed market. Currently the firm has invested over US$160 million into 12 feed mills and two warehouses used for farm produce supply.

In the first eight months of 2019, the Vietnamese economy saw the establishment of 90,500 enterprises with a total registered capital of VND1.15 quadrillion (US$50 billion), up 3.5% in the number of enterprises and 31% in capital. In which, the number of those operating in the manufacturing sector was 24,500, or 27% of total, ranking second, after the service sector with the number of newly-established enterprises being 64,700 or 71.6% of total.

FocusEconomics sees fixed investment in Vietnam rising 8.3% in 2019, and moderating to 7.6% next year.