Vietnam’s agricultural, forestry and fishery production in May 2020 also faced several difficulties resulted from drought and saline intrusion which severely affected cultivation and aquaculture. African hog cholera has been controlled but the rate of re-herd is low. Additionally, although the Covid-19 epidemic has been basically controlled in Vietnam, its development in other parts of the world are still complicated, directly affecting the exports and production of Vietnam’s agricultural products. Forestry and fishery production has showed signs of recovery but the recovery rate was quite slow.
The complicated Covid-19 epidemic in the world led to a disruption in the supply chain of raw materials for input production, thereby severely affecting Vietnam’s industrial production. However, the Index of Industrial Production (IIP) of Vietnam in May 2020 was estimated to increase by 11.2% over the previous month and decrease by 3.1% over the same period last year, of which the mining industry decreased by 13%; processing and manufacturing sector decreased by 2.4%; electricity production and distribution increased by 2%; water supply and waste and sewage treatment increased by 2.3%.
In the first 5 months of the year, IIP was estimated to increase by 1% over the same period last year, much lower than the 9.5% increase of the same period in 2019. Of which, the manufacturing and processing industry increased by 2.2%, contributing 2 percentage points to the general increase; power production and distribution increased by 2.6%, contributing 0.2 percentage points; water supply, waste and sewage treatment increased by 2.9%, contributing 0.1 percentage points. In contrast, the mining industry decreased by 8.1%, contributing minus 1.3 percentage points to the general increase.
In May 2020, there were 10,728 newly established enterprises with a total registered capital of VND 112.7 trillion and a total registered labor of 91.5 thousand employees, which were an increase of 36.1%, 20.1% and 27% in the number of enterprises, registered capital and number of employees, respectively, compared to the previous month. The average registered capital of a newly established enterprise reached VND 10.5 billion, decreasing by 11.7% compared to both the previous month and the same period in 2019.
Generally, in the first 5 months of the year, there were 48.3 thousand newly registered enterprises with a total registered capital of VND 557.9 trillion and a total registered labor of 407.2 thousand employees, a decrease of 10.5%, 16.7% and 24.2% in the number enterprises, registered capital and number of employees, respectively, compared to the same period last year. The average registered capital of a newly established enterprise in the first 5 months reached VND 11.5 billion, a decline of 6.9% over the same period last year.
In the context that the Covid-19 epidemic has been well controlled in Vietnam, construction investment activities have basically returned to normal. The progress of projects and works is being sped up. The growth rate of realized investment capital from the state budget in May and the first 5 months of 2020 reached the highest level in the period 2016-2020.
Realized investment capital from the State budget in May 2020 was estimated at VND 31.1 trillion, up 17.5% over the same period last year. Generally, in the first 5 months, the total realized investment capital from the State budget reached VND 116.3 trillion, accounting for 24.9% of the year plan and increasing by 15.6% over the same period last year.
As of May 20, 2020, total foreign investment capital including newly registered capital, adjusted registered capital and capital contribution and share purchase of foreign investors reached USD 13.9 billion, decreasing by 17% YoY. Of which, there were 1,212 newly licensed projects with a registered capital of USD 7.4 billion, down 11.1% in the number of projects and up 15.2% in the registered capital against the same period last year.
May was the first month when life returned to normal after social distancing, so consumption has showed signs of recovery. Total retail sales of consumer goods and services in May were estimated at VND 384.8 trillion, up 26.9% over the previous month and down 4.8% over the same period last year, of which: retail sales of goods reached VND 311.1 trillion; that of accommodation and catering services reached VND 32.5 trillion; that of tourism reached VND 0.4 trillion, which was a sharp increase of 780.1% over April and decrease of 87.8% over the same period last year. Sales of other services was VND 40.8 trillion.
For the first 5 months of the year, total retail sales of consumer goods and services reached VND 1,913.9 trillion, a decrease of 3.9% compared to the same period last year, if excluding the price reduction factor, the figure would be 8.6% (in the same period in 2019, it increased by 8.5%).
The Covid-19 epidemic continues to evolve complicatedly in markets which are the main trading partners of Vietnam, which has negatively affected Vietnam's import and export activities. Total import and export turnover of the first 5 months was estimated at USD 196.84 billion, down 2.8% over the same period last year.
Export turnovers in May 2020 were estimated at USD 18.5 billion, up 5.2% over the previous month. For the first 5 months of the year, export turnover of goods was estimated at USD 99.36 billion, down 1.7% over the same period last year. Regarding export markets, the United States is Vietnam's largest export market in the first 5 months with a turnover of USD 24.6 billion, up 8.2% over the same period last year. Followed are China, EU, ASEAN, Japan and South Korea.
Import turnovers in May 2020 were estimated at USD 19.4 billion, up 4.7% over the previous month. Compared to the same period last year, import turnover in May 2020 was estimated to decrease by 15.9%. For the first 5 months of the year, import turnover was estimated at USD 97.48 billion, down 3.8% compared to the same period last year. China is Vietnam's largest import market with an estimated turnover of USD 28.9 billion, down 3% from the same period last year.
In May, Vietnam suffered a trade deficit of about USD 900 million. Generally, in the first 5 months of 2020, the trade balance of goods had a trade surplus of approximately USD 1.9 billion, of which the domestic economic sector witnessed trade deficit of USD 8.6 billion while FDI sector (including crude oil) enjoyed a trade surplus of USD 10.5 billion.
Average CPI in the first 5 months of 2020 increased by 4.39% compared to that of the same period in 2019. CPI in May 2020 decreased by 1.24% compared to December 2019, and increased by 2.4% compared to the same period last year.
Core inflation in May 2020 decreased by 0.03% over the previous month and increased by 2.54% over the same period last year. The average core inflation in the first 5 months of this year increased by 2.88% compared to the same period in 2019.
>> Vietnam’s four-month economic overview (April 2020)
Source: GSO, Compiled by VietnamCredit
