HCMC – All major mobility indicators in Vietnam inched up sharply in January, ahead of the Tet holiday, as the vaccination rate surpassed 73% of the population, according to the World Bank’s recently-released Vietnam Macro Monitoring.
The bank said that industrial production continued to grow, though at a slower pace and with mixed performance across sub-sectors, while retail sales posted the first positive year-over-year growth rate since the fourth coronavirus wave started in late April 2021.
Specifically, industrial production index growth moderated to 2.4% year-on-year, from 8.7% year-on-year in December 2021. This moderation mainly reflected a 5% y-o-y decrease in the production of computers, electronics and optical products, compared to a 15.6% y-o-y growth in December 2021.
Meanwhile, manufacturing of metal products, apparel and footwear posted growth rates of over 10% year-on-year. These two contrasting trends were mainly driven by external demand, as their exports exhibited similar patterns.
Also, potential differences in sector-specific labor shortages might be another contributing factor. Employment in computers, electronics, and optical products manufacturing at the beginning of January 2022 fell by 1.7% year-on-year, while employment in apparel and footwear manufacturing reached or surpassed their levels a year ago.
One possible explanation is that it may be easier to recruit and train workers to make garments and footwear, than to produce electronic components, or the crisis may have led to further labor-saving automation in electronics production, thus reducing labor needs.
The manufacturing PMI jumped from 52.5% in December last year to 53.7%, the highest reading since May 2021, indicating significantly improved business conditions.
As for foreign direct investment (FDI) attraction, Vietnam attracted US$2.1 billion of FDI commitments in January, up 4.2% against the year-ago figure. The growth was driven by large investments in expansions of existing businesses, particularly in electronics and by active M&A activities. The latter doubled in value in January 2022, compared to one year ago, reaching over US$400 million, equivalent to 20% of total FDI commitments.
The Consumer Price Index edged up by 1.9% year-on-year, comparable to the rates recorded at the end of 2021.
Also, credit within the economy last month grew 16.3% year-on-year, compared to 13.5% in December 2021. This acceleration reflected rising credit demand, as businesses ramped up production and households increased spending before Tet. As a result of stronger demand for credit, overnight interbank interest rates jumped to 2.42% by end January from 0.73% at the end of December 2021.