Industrial Production to Face Continued Pressures in 2024

DNHN - The Ministry of Industry and Trade predicts that 2024 will continue to face pressure from external factors, including slow growth in international trade, difficulty in attracting foreign investment, and depreciation pressure on the domestic currency.

2023 has taken the manufacturing sector through a volatile journey, with many subdued aspects. Industrial production experienced a period of negative growth for more than half of the first year, only showing signs of recovery in the last four months of the year.

Manufacturing enterprises, including key industries, faced numerous challenges. High capital costs affected their recovery. Demand for goods declined sharply, leading to a slowdown in production activities and a less optimistic export outlook. According to the Ministry of Industry and Trade, key indicators of the manufacturing sector have not met the set targets. For example, export growth decreased by 4.4%, while the target was a 6% increase.

The added value of the processing and manufacturing industry, a crucial foundation, reached its lowest level from 2011 to 2023. Its contribution to economic growth was limited compared to previous years. The industry’s consumption index also decreased, while the inventory rate increased, indicating difficulties in producing and consuming industrial products.

According to the General Statistics Office, the added value of the entire industrial sector in 2023 increased by only 3.02% compared to the previous year, reaching its lowest level during the period from 2011 to 2023 and contributing only 1% to the total added value growth of the entire economy. The processing and manufacturing industry also achieved its lowest growth rate during this period, at only 3.62%.

Andrew Harker, Economics Director at S&P Global Market Intelligence, emphasised that the final production data for 2023 reflects a negative picture for Vietnam’s manufacturing sector, with weak demand leading to a decline in output. Deputy Prime Minister Tran Hong Ha also expressed concern about the sharp decline in the processing and manufacturing industry, particularly in the electronics sector.

The Ministry of Industry and Trade predicts that 2024 will continue to face significant pressure from external factors, including slow growth in international trade, difficulty in attracting foreign investment, and depreciation pressure on the domestic currency against the USD. These challenges will continue to impact both production and import and export activities in Vietnam.

After a year of low growth, the domestic manufacturing sector needs to flexibly adjust production, especially in the textile and garment industry. In the fourth quarter of 2023, there were signs of orders returning, but tensions in the Red Sea and geopolitical conflicts are threatening the global supply chain. This poses a significant challenge to the strategy of promoting industrial production and the market during this difficult period.

P.V