1. Vietnam’s Industrial Production Index (IIP) in 2023
The IIP in December 2023 increased by 0.1% compared to the previous month and 5.8% compared to the same period last year. This growth was mainly driven by the following industries: Metal production (42%); Waste collection, treatment, and disposal; recycling of waste materials (+26% compared to the same period last year); Pharmaceutical, medical and herbal products (+25.5% compared to the same period last year).
Despite the positive growth in December, the IIP for 2023 only increased by 1.5% - the lowest rate in 2019 - 2022. This indicates that the Vietnamese industrial sector still faces many difficulties during a global economic slowdown.
Figure 1. IIP Index Growth Rate in the 2019 - 2023 (%)
2. Vietnam Manufacturing PMI in 2023
Vietnam's Manufacturing PMI fell to 48.9 in December, according to a report released by S&P Global. This is the fourth consecutive month that the index has remained below the 50-point threshold, indicating a decline in business conditions in the sector. However, the rate of decline slowed in December, with the index rising 2.6 points from November. This decrease indicates the manufacturing sector's poor performance over the majority of 2023, with just minor increases in February and August.
Figure 2. Vietnam manufacturing PMI in 2023
The 2023 PMI results were the lowest since the COVID-19 pandemic outbreak in 2020. The unpromising index was caused by weak demand, contributing to a second consecutive month of decline in new orders and a corresponding decrease in output. Meanwhile, purchasing activity and employment remained largely unchanged.
With this result, S&P Global predicts a more optimistic outlook for 2024, expecting a recovery in manufacturing demand both domestically and internationally. This will lead to stability in employment and purchasing activities for businesses in December.
3. Import and Export 2023 - The first negative growth in over a decade
The global economic situation remained challenging in 2023. Vietnam's key trading partners were facing challenges due to the country's ongoing economic slump, high inflation, and declining demand for industrial products. As a result, Vietnam's forecast for industrial production in 2023 seemed less promising. This has resulted in negative growth in the country's trade balance, indicating a drop in exports and imports.
According to preliminary statistics, Vietnam's total import and export turnover of goods in 2023 is estimated to reach 683 billion USD, a decrease of 6.6% compared to the previous year. This is the first time in 14 years, since 2009 (the time of the global economic crisis), that Vietnam's import and export turnover has recorded negative growth.
Figure 3. Vietnam's import-export turnover and trade balance in 2012 - 2023 (billion USD)
The export turnover of goods reached 355.5 billion USD, a decrease of 4.4% compared to the same period. The main reasons are attributed to the ongoing global economic and social challenges: Despite a decrease in inflation, most major economies are experiencing low growth due to declining overall demand, tightened monetary policies; escalating conflicts, such as the complex situation between Russia and Ukraine; Political instability, food security concerns, natural disasters, climate change… are also on the rise.
The import turnover of goods is estimated to reach 327.5 billion USD, a decrease of 8.9% compared to the same period. There are four product categories with import values exceeding 10 billion USD, accounting for 46.8% of the total import turnover. In terms of import markets, China remains the largest market with an estimated turnover of 111.6 billion USD.
Overall, the economy faces numerous challenges in 2023, and it is projected that 2024 will be a year of economic recovery. Industrial production indices and the import-export landscape are expected to show more positive outcomes compared to the previous year. However, unforeseen political issues may still impact the economic recovery in the coming year.
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