Available data point to a continued recovery in domestic economic activity, with industrial production growing 8.5 percent year over year and broad improvement in manufacturing despite the rise in new Covid-19 cases to more than 100,000 infections per day end of February.
After declining in January, manufacturing of computers, electronics and optical products recovered with a year-over-year growth of 9.1 percent. According to the report, clothing production continued to perform strongly, growing 24.7 percent from the same period last year.
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Retail sales grew by an estimated 3.1 percent in February. Consumer services sales continued to recover, rising 5.9 percent, the first increase since May 2021, as sales of accommodation and catering services grew strongly. Sales of goods increased by 2.4 percent.
As imports grew much faster than exports, the trade balance deteriorated from a surplus of $1.4 billion in January to a deficit of $2 billion in February.
The higher export growth was attributable to telephones, computers and electronics and machinery, whose exports grew 6.2 percent in February.
The export of clothing textiles remained strong and grew by 25.8 percent. The stronger imports partly reflect a jump in imports of telephones, computers and electronic components from 14.9 percent in January to 32.3 percent in February.
Imports of petroleum products also increased by 146.8 percent, clearly a reflection of rising oil prices. Due to trading partners, exports to the US remained robust, growing 14.6 percent, while exports to China recovered and grew 19.5 percent after falling 15.2 percent in January.
The WB letter also indicated that BDI’s commitment was slowing, while BDI’s payout continued to recover strongly.
Vietnam attracted $2.9 billion in foreign direct investment in February, 15.9 percent less than a year ago. Most of the commitments were made by existing companies looking to expand their production facilities.
The disbursement of approved FDI projects rose 7.9 percent in February, a third month of growth.
“CPI inflation remained subdued thanks to relatively stable food prices and still weak domestic demand. Credit demand remained strong after the Lunar New Year, with interbank interest rates remaining at 2.56 percent at the end of February, compared to less than 1 percent at the end of 2021,” the report continues.
The budget balance was in surplus of $1.1 billion in February as sales remained strong. Expenditure increased thanks to better disbursement of public investment.
Revenues rose 5.3 percent in February, while spending rose 6.1 percent thanks to improvements in the implementation of the government investment program.
In the first two months, the Vietnamese government collected 22.9 percent of the total planned annual revenue. The government also spent 12.8 percent of its planned expenditure. Public investment disbursements improved significantly, reaching 8.6 percent of the prime minister’s target, much higher than the 5.1 percent recorded in the same period last year.
The Treasury Department issued $412 million in local currency government bonds in February, bringing total bond issuance in the first two months to $1.4 billion, or 8.1 percent of the annual plan.
WB experts noted that Vietnamese authorities should encourage exporters to seek new markets and innovate in new products through global value chains and existing free trade agreements to strengthen export resilience. It is also justified to keep track of domestic price developments.
Continued administration of the vaccine boosters and renewed health guidelines are critical to controlling the Omicron wave, the bank advised.
@ Vietnam News Agency