Vietnam: Industrial production expands in March
Industrial production expanded 5.4% in March year-on-year due to higher manufacturing output more than offsetting a contraction in mining and quarrying. March’s reading was down from February revised 22.3% increase (previously reported: +23.7% year-on-year). However, it should be noted that February’s reading was distorted by the Lunar New Year holiday, which last year fell in February, creating a favorable base of comparison. Looking at data for the first quarter points to easing momentum, as industrial production growth averaged 5.8%, down sharply from Q4’s reading.
Looking ahead, industrial production will likely remain under pressure in coming months due to the Covid-19 pandemic affecting domestic and external activity. However, momentum should recover in the medium-term, and 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 spat, thanks to a cheap workforce and business-friendly government.