Vietnam: Industrial production declines in January on Lunar New Year celebrations
January 29, 2020
Industrial production contracted 5.5% in January year-on-year, contrasting December’s 6.2% expansion. January’s reading was driven chiefly by lower output in the manufacturing and mining sectors. However, the Lunar New Year holiday distorted the reading, since there were fewer working days in January 2020 compared to a year prior.
Industrial production growth should bounce back in February, and is forecast to remain elevated in 2020, spearheaded by a burgeoning manufacturing sector. Vietnam is an attractive low-cost base for manufacturing firms, including those looking to relocate from China due to the U.S.-China trade spat, thanks to a cheap workforce and business-friendly government. However, due to its open nature, the economy will remain vulnerable to a potential global economic slowdown, while possible U.S. tariffs would also hurt industrial activity.
Author: Oliver Reynolds, Economist