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A survey on manufacturing enterprises conducted by Navigos has found that more than 50 percent of businesses reported a revenue drop of 10-40 percent. Of this, 44 percent of textile & garment and footwear enterprises, and 35 percent of building material manufacturing enterprises reported a sharp fall of 20-40 percent in revenue.

The survey also found that in the first nine months of the year, some products saw revenue drop dramatically compared with the same period last year, including automobiles (- 19.3 percent), bar steel (- 14.4 percent), mobile phones (- 12.8 percent), motorbikes (- 8.4 percent), leather shoes (- 5.3 percent), cement (- 4.3 percent), exploited crude oil (- 3.7 percent) and casual clothing (- 3.6 percent).

Vietnam’s Purchasing Managers' Index (PMI) of S&P Global was 49.7, dropping again after it climbed to 50.5 points one month before. The index showed a decline in business conditions of Vietnamese manufacturers, though the decrease was slight.

The industrial production index in September increased by 0.1 percent over August and 5.1 percent over the same period last year, while the index of the first nine months of the year grew by 0.3 percent, which was the first positive growth rate so far this year.

The inventory index of the entire processing and manufacturing industry was estimated to increase by 19.4 percent as of September 30, 2023 compared to the same time last year (the increase was 13.4 percent at the same time last year). Meanwhile, the inventory index of the first 9 months was 85.3 percent (it was 76.4 percent in the first nine months 2022).

The statistics released by the General Department of Customs (GDC) and the reports by associations showed that some businesses have begun receiving new orders, but many enterprises still complain about the lack of orders. The export turnover of mobile phones and phone accessories decreased by 13 percent, textiles and garments 12 percent, footwear 18 percent and seafood 22 percent.

As for the woodwork industry, the demand dropped sharply by 25 percent, or $3 billion, compared with the same period last year.

The automobile sales reported by the members of the Vietnam Automobile Manufacturers’ Association (VAMA) decreased by 30 percent compared with the same period in 2022 and it was lower than 2021, when the pandemic reached its peak.

The lack of orders and decrease in revenue have made it difficult for enterprises to retain workers while waiting for the market to recover. A high number of enterprises have decided to scale down production, cut working hours and organize rotating working shifts.

However, analysts said the good news for Vietnam, which has an export-oriented economy, is the recovery of the global economy, especially of the two largest economies – the US and China.

China's national statistics agency has reported that the PMI increased to 50.2 points in September from 49.7 percent, higher than the predicted level of 50.0. The figures, say analysts, mean that the second largest economy in the world has bottomed out and begun recovering.

In the US, the US Federal Reserve may stop raising interest rates soon. The statistics released on September 1, 2023 showed that the number of jobs in non-agriculture sectors in the US was 187,000 in August, higher than expected. However, the job growth rate is slowing down.

Therefore, exports are predicted to continue to prosper in the last months of the year since the inflation rates of the large economies such as the US and Europe are decreasing and inventory levels are on the decrease, while demand will increase in year-end holidays.

China, the second largest export market for Vietnam, has slashed operating interest rates in an effort to recover the economy, bringing hope that demand of the large economy will improve in the time to come.

The fact that developed economies continue to implement the strategy on diversifying supply sources and investment destinations (China + 1) is expected to help Vietnam become an important production and export center in the global value chain.

Luong Bang