Vietnam: Industrial activity declines again in September
Industrial output fell 8.1% year-on-year in September, easing from August’s 9.5% decline. The figure marked the third consecutive month of falling output, and reflected restrictions placed on key regions to combat the recent outbreak of Covid-19 cases. September’s milder fall was largely driven by a softer drop in manufacturing production.
Meanwhile, annual average industrial production growth fell to 4.9% in September (August: +6.0%), signaling a worsening trend in the industrial sector.
Looking ahead, industrial production is projected to grow at a strong rate in 2021, before accelerating in 2022 as the pandemic eases and associated restrictions are eased. Despite the ongoing Covid-19 pandemic, the underlying strength of Vietnam’s industrial sector remains intact: Vietnam is an attractive low-cost base for manufacturing firms, including those looking to relocate from China due to the U.S.-China trade tensions. That said, general uncertainty regarding the pandemic poses a risk downside to the outlook.