- 2024-08-07T00:00:00
- Macroeconomics
- Production recorded double-digit growth for the third consecutive month. The overall index of industrial production (IIP) rose 11.2% YoY in July – the third consecutive month recording double-digit growth (May 2024: +10% YoY; June 2024: +12.4% YoY), in which the manufacturing sub-sector IIP surged 13.3% YoY. In 7M 2024, the overall IIP and manufacturing IIP increased 8.5% YoY and 9.5% YoY, respectively. We expect production could sustain its recovery cycle given the ongoing strong growth of new orders in the latest PMI report.
- Retail sales continued improving. In July, total retail sales of goods & services rose 9.4% YoY. In 7M 2024, total retail sales rose 8.7% YoY (retail sales of accommodation & catering services: +15.2% YoY; retail sales of tourism services +31.8% YoY). Several factors could continue to support the recovery of domestic consumption including: (1) Ongoing recovery of international arrivals, especially from China; (2) the recent extension of the 2 ppts VAT cut to year-end and the increase in the statutory base rate in public sector salaries effective from July 2024; and (3) according to the latest PMI report and reports from several provinces such as Hanoi and Ho Chi Minh City, recruitment demand has risen recently to fulfill the strong increases in new orders.
- State revenue saw strong growth. According to the Ministry of Finance (MoF), total State revenue and expenditures amounted to VND1,181.1tn (USD46.5bn; +14.6% YoY) and VND948.3tn (USD37.3bn; +0.6% YoY), completing 69.8% and 44.7% of the annual plan, respectively, leading to a fiscal surplus of VND232.8tn (USD9.2bn) in 7M 2024 (3.9x vs a surplus of VND59.1tn or USD2.3bn in 7M 2023). In terms of budget expenditures, State spending for investment & development declined 8.4% YoY (from a high base in 7M 2023) to VND232.1tn (USD9.1bn), completing 34.3% of the annual plan. We expect the disbursement of development and investment to seasonally accelerate at the end of the year. Due to the positive State budget revenue in 7M 2024, the Government could be more flexible in implementing fiscal measures to support Vietnam’s economy.
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