Vietnam: Industrial activity records largest decline in over one year in August
Industrial output fell 10.0% year-on-year in August (July: -0.6% yoy). The figure marked the worst reading since April 2020. August’s notable weakening was largely driven by a sharper drop in manufacturing production, which fell at the sharpest pace since April 2020. In addition, electricity output also contracted sharply.
Meanwhile, annual average industrial production growth fell to 6.2% in August (July: +7.2%). This signals a worsening trend in the industrial sector.
After last year’s slowdown, industrial production is projected to gain momentum on the back of returning demand from key international partners. 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, a relatively slow vaccine rollout, coupled with general uncertainty regarding the pandemic, pose a risk to the outlook.