Vietnam's industrial production unexpectedly slips

The industrial production index went down in November with the decline of both mining and manufacturing industries. This is a big surprise in the context of stable global and domestic demand.
">
The industrial production index went down in November with the decline of both mining and manufacturing industries. This is a big surprise in the context of stable global and domestic demand.

Industrial production index

The index in November unexpectedly decreased by 1.6 percent compared with October, thus making the industrial growth rate fall to 5.4 percent, much lower than the 9.6 percent increase in the first 10 months of the year.

{keywords}

However, the accumulative industrial production index still increased by 9.3 percent in the first 11 months of the year, just slightly lower than the 10.1 percent of the same period last year.

The mining industry in November decreased by 5.3 percent compared to October. Of this, the coal exploitation dropped by 8 percent and oil and gas exploitation by 6.4 percent.

The processing and manufacturing industries also decreased by 1.1 percent in November, forcing the growth rate in the first 11 months down to 6.5 percent, lower than the 11 percent growth rate in the first 10 months.

Bao Viet Securities commented that the decline of the industrial production index is abnormal in the context of no big changes in the demand in Vietnam and the world, therefore, it needs further consideration. However, it thinks this is just temporary and the production would bounce back in December.

Regarding domestic demand, the retail turnover in November 2019 increased by 0.8 percent compared to October and 12.1 percent compared with the same period last year. In the first 11 months, the retail turnover increased by 12.1 percent.

Analysts noted that the cumulative increase tends to slow down since May 2019, a sign showing that demand is weaker.

Regarding inflation, the CPI in November increased by 0.96 percent over the month before and by 3.78 percent over the same period last year. This was the second month which saw a sharp increase and 80 percent of the CPI increase in the month was made up by the pork price surge.

Investment capital disbursement

The registered FDI capital in the first 11 months decreased by 11.2 percent, and the implemented FDI capital increased by 6.7 percent compared with the same period last year, while the capital spent to buy into Vietnamese companies increased by 47.1 percent.

The registered FDI capital is still on the decrease (- 11.2 percent in November), but the drop in November was lower than the decrease in Q2 (- 35 percent).

Bank liquidity fluctuates

In the first two weeks of November, the interbank interest rate stayed at a low level of below 2 percent. However, in the next two weeks, the interbank interest rate soared to 4.5 percent per annum on November 26 before it decreased to 3.5 percent in recent sessions.