- Production increased from low base. In January, the overall index of industrial production (IIP) declined 4.4% MoM; however, it increased 18.3% YoY (the highest figure since April 2021) from a low base of the same period last year (-14.9% YoY in January 2023, caused by the Tet holiday). IIP of the manufacturing sub-sector declined -4.8% MoM but surged 19.3% YoY (vs -15.6% YoY in January 2023). In February, production activities could be affected by the Tet holiday, which may lead to lower IIP results. However, we expect that the improvement of exports and imports could continue to support production in the coming months.

- Retail sales of tourism remained solid thanks to robust foreign inbound arrivals. In January, retail sales of goods & services rose 1.6% MoM and 8.1% YoY thanks to increasing consumer demand ahead of the Tet holiday. Notably, retail sales of accommodation & catering services and retail sales of tourism continued to surge 10.2% YoY and 18.5% YoY, respectively, thanks mainly to international arrivals reaching 1.5 million in January, the highest monthly level since the start of the COVID-19 pandemic. In February, increased Tet holiday tourism demand from domestic and foreign visitors may boost retail sales. Some businesses reported a sharp rise in customer numbers near Tet, mainly purchasing essential items like food, confectionery, and drinks.

- State budget posted a VND102tn surplus in January. According to the Ministry of Finance (MOF), total State revenue and expenditure amounted to VND231.0tn (USD9.5bn; -2.8% YoY) and VND128.9tn (USD5.3bn; -0.2% YoY), completing 13.6% and 6.1% of the annual plan, respectively, leading to a fiscal surplus of VND102.1tn (USD4.2bn) in January 2024 (vs a surplus of VND108.3tn or USD4.4bn in January 2023). We maintain our view that public investment will be one of the key drivers for Vietnam’s economy in 2024. As of January 31, 2024, Vietnam disbursed VND662.59tn (USD27.bn) of public investment capital allocated for 2023, a sharp increase of nearly 23% YoY and achieving 93.12% of the plan assigned by the Prime Minister (vs 91.41% in 2022).

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