Vietnamese economy shows positive signals in January

In the first month of 2021, the Vietnamese economy showed positive signals with an increase in export revenue of goods as well as foreign direct investment (FDI) attraction.

Malie Nguyen

Dieuhuong270198@gmail.com February 20, 2021 | 09:40

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2021 has been identified as the year of economic recovery in Vietnam with a growth rate target of 6.5% set by the Government, 0.5 percentage points higher than that assigned by the National Assembly, requiring the whole political system to drastically take part right from the first days and quarter of the year, Nhan Dan Newspaper reported.

In the first month of 2021, the economic outlook showed positive signals. Photo: Nhan Dan

In the first month of 2021, the economic outlook showed positive signals. Specifically, the industrial production index in January 2021 increased by 22.2% over the same period last year; export revenue of goods increased by 50.5%, of which six items achieved revenue of more than US$1 billion, accounting for 67.3% of total export turnover. The disbursement of public investment capital increased by 24.5%.

Notably, business registration activity grew impressively on the index of newly established enterprises, registered capital and labor, thereby adding more than VND395 trillion in investment capital to the economy, up 10.5% over the same period last year.

Vietnam recorded a trade surplus of US$1.3 billion in January 2021 mainly thanks to the FDI sector, according to the preliminary data released by the General Statistics Office.

The domestic economic sector recorded a trade deficit of 1.8 billion USD while the FDI sector (including crude oil) reported a trade surplus of 3.1 billion USD in the first month of this year, VNExpress reported.

The export value of the heavy industry and mining sector surged nearly 72%, reaching 15.6 billion USD. The light industry and handicrafts earned 9.7 billion USD in export revenue, increasing 21%.

The US remained the largest importer of Vietnamese products in January with a turnover of 7.5 billion USD, representing a 57% year-on-year increase. It was followed by China (5.8 billion USD, up 111%), the EU (2.8 billion USD, up 14%), ASEAN (2.3 billion USD, up 32%).

Vietnam recorded a trade surplus of US$1.3 billion in January 2021. Photo: VNA

In terms of the attraction of foreign direct investment (FDI), some localities continue to attract high-tech projects, such as Foxconn's US$270 million project in the northern province of Bac Giang. The fact that Foxconn, one of the largest manufacturers of electronic components and computers in the world, specializing in Apple products, invested in Vietnam at this time has strengthened the confidence of international investors in the country's investment and business environment.

Meanwhile, foreign enterprises investing in Vietnam are also more optimistic about their business prospects. For example, in its latest survey results, the Japan Trade Promotion Organisation (JETRO) has announced that 46.8% of Japanese enterprises will expand production and business in Vietnam in the next one to two years, thanks to optimistic forecasts about potential growth in domestic and export sales as well as high levels of growth in general.

However, the economy is also facing risk as the COVID-19 epidemic reappeared in the community at the end of January. Industrial production has not recovered as quickly as it did before the epidemic. Enterprises continue to lack production materials. Many export markets have not been able to recover because major economies in the world continue to restrict imports due to social distancing and border closures.

Illustrative photo: SGGP

The service sector has not yet recovered and continues to face difficulties even before the new wave of the pandemic. According to calculations by the Ministry of Planning and Investment (MPI), if the COVID-19 epidemic is promptly controlled in the first quarter of the year, it is estimated GDP in the first quarter of 2021 will increase by 4.46%, 0.66 percentage points lower than the target set out in Government Resolution No. 1 on the main tasks and solutions to realize the socio-economic development plan and State budget estimates in 2021.

In order to achieve the set growth target, the MPI proposes the Government should continue to make disease prevention and control a top priority, ensuring the health of the people as well as limiting the negative impacts caused by the epidemic on the economy.

Socio-economic development solutions must be implemented by ministries, branches and localities in a more urgent and drastic manner. The independence and self-reliance of the economy should be enhanced in the new situation.

Specifically, new strategies and policies should be devised to promote innovation, apply science and technology to seizing opportunities opened by the Fourth Industrial Revolution; research, monitor and update new trends, models and policies from countries that impact Vietnam, improve the internal capacity, self-reliance and resilience of the economy. The MPI is currently completing a master plan on improving the internal capacity and self-reliance of the economy and will soon submit it to the Government.