12:02 | 24/07/2016 Industry
(VEN) - Industrial production and exports have faced many difficulties in the first half of the year, and this year’s targets as set by the National Assembly could prove hard to hit.
Industrial production has faced many difficulties
Declined industrial production
According to the General Statistics Office (GSO), the index of industrial production (IIP) increased by around 7.4 percent in June alone and 7.5 percent in the first half of the year, lower than that of 9.7 percent during the same period last year.
The manufacturing and processing sector recorded growth of 10.1 percent, contributing 7.1 percentage points to the general IIP in the first half of the year. Electricity production and distribution climbed 11.7 percent, making up 0.8 percentage points, while water supply and waste treatment expanded 8.1 percent, contributing 0.1 percentage points. Meanwhile, the mining sector dropped by 2.2 percent year-on-year, leading to a fall of 0.5 percentage points in the general IIP.
Compared to that of 30-40 percent during the same period last year, the figure of 10.1 percent in the manufacturing and processing sector in the first half of this year was seen as modest increase due to decreasing growth in the production of mobile phones, equipment and computers. Other sectors also witnessed low IIP increase because of the general difficulties facing the global and domestic economy.
The GSO’s Industrial Statistics Department Director Pham Dinh Thuy said that a fall of 2.2 percent in the mining sector was not seen as a good sign for the economy due to the imminent exhaustion of mineral reserves. Thuy believed the sector would continue its downturn in the following years.
Global oil prices have had great effects on the mining sector because crude oil prices fell to a record low of less than US$27 a barrel on January 20 this year.
The consumption index of the manufacturing and processing sector in May alone increased by 5.2 percent compared to April and 7.8 percent in comparison to the same month last year, while climbing 8.8 percent in the first five months of the year compared to a year ago. As of June 1, the inventory index of the sector increased nine percent on-year, lower than that of 11.8 percent during the same period last year.
Difficulties facing exports
According to the GSO, export turnover in the first half of the year reached an estimated US$82.2 billion, an increase of 5.9 percent compared to a year ago, including US$23.7 billion from the domestic sector and US$58.5 billion from the foreign direct investment sector, lower than that of 10 percent set by the National Assembly.
Exports in the first half of the year saw highlights despite facing difficulties. The domestic sector plays a key role in the economy, and has witnessed positive growth in recent months, meaning that domestic production has shown signs of recovery.
Vietnam’s export growth of 5.9 percent in the first half of the year remained higher than other countries in the region such as China, India and Indonesia. After many years of seeing high growth, the slowdown in export turnover is normal as the market has become saturated and demand has not increased suddenly.
Agricultural, forestry and fishery exports continued to be the highlight during the first half of this year with export turnover of US$15.05 billion, an on-year increase of 5.4 percent. This was seen as a positive sign as agricultural, forestry and fishery products faced many difficulties in 2015 due to a strong fall in its volume and value.
The US remained Vietnam’s largest market with export turnover of US$17.7 billion, an increase of 12.8 percent compared to a year ago, followed by the EU with US$16.3 billion, China with US$9.2 billion and the Republic of Korea with US$5.1 billion. However Vietnamese exports to ASEAN and Japan recorded a fall of 12.6 percent and 1.3 percent, reaching US$8.2 billion and US$6.6 billion, respectively.
Imports in the first six months of the year reached US$80.7 billion, a drop of 0.5 percent compared to a year ago, including US$33.4 billion from the domestic sector and US$47.3 billion from the foreign direct investment sector. As a result, the country achieved trade surplus of US$1.5 billion.
The GSO also predicted that this year’s export growth would be hard to hit the target as set by the National Assembly.
The industry and trade sector is targeting a growth rate of between 9-10 percent in the IIP and 10 percent in the export growth, while the trade deficit will be maintained at below five percent of total export turnover.