Vietnam: Industrial output shrinks for first time in 10 months in February
Industrial production fell 6.1% year-on-year in February (January: +24.4% yoy). February’s print marked the first downturn since May 2020 and the sharpest in 10 months, and was largely driven by falling manufacturing, mining and electricity output.
As a result, the trend deteriorated significantly, with the annual average growth of industrial production coming in at 3.1%, down notably from January’s 5.2% reading.
Nevertheless, industrial production should gain steam this year after 2020’s slowdown, as economic activity recovers in key international markets. Moreover, the underlying strength of Vietnam’s industrial sector remains intact despite Covid-19: Vietnam is an attractive low-cost base for manufacturing firms, including those looking to relocate from China due to the U.S.-China trade tensions. However, uncertainty regarding the evolution of the pandemic and a sluggish domestic rollout of vaccines cloud the outlook somewhat.