General indexes

According to the General Statistics Office (GSO), the gross domestic product (GDP) grew by 7.2% in the first quarter of the year, lower than 2005’s first quarter level of 7.3%. Of the 7.2% growth rate, agriculture, forestry and aquaculture made 0.3 percentage points, while the industry and construction sectors made 3.7 percentage points and the service sector 3.2 percentage points.

Bad weather and pestilent insects have slowed agricultural, forestry and aquacultural growth rates. Meanwhile, the service sector saw satisfactory growth of 7.4%, higher than the previous year’s level of 7.2%.

The total state budget collection volume in the first quarter of the year amounted to 23.5% of the yearly estimates. The receipts from crude oil export amounted to 24.8% of the yearly estimates, and from other import – export activities 23%. The overhead expenses from the state budget were equal to 22.1% of the yearly plan, of which the expenses for investment and development were 20.8%.

Industrial production down

In the first quarter of the year, the industrial production grew by 14.7%, a lower-than-expected level. The stagnation of March 2006 has led to slowing of industrial production for the whole quarter.

Several key industries, including crude oil, automobile and motorbike assembly, cement, coal, and chemical fertiliser saw the growth rate reduction or just a slight growth rate compared to March, 2005.

Some key products like apparel, shoes and petrochemical products also witnessed a slower pace of development. Meanwhile, consumption of several products in the domestic market has slowed. The trade barriers installed by the importers, such as the anti-dumping tariffs on shoes, and quotas on apparel exports, have hurt local producers as some partners have ceased placing orders.

Good start for investment

The total investment sum reported in the first quarter of the year reached VND64.1tril, or 17% of the yearly plan, which represented an increase of 19.8% compared to the same period of 2005. Of this, VND32.9tril came from the state budget (up by 19%), VND18tril from non-state sources (up by 20%), and VND13.2tril from foreign direct investment (up by 21.3%).

In the first three months of the year, 215 foreign investment projects were granted licenses with total registered capital of $1.625bil, which meant a $7.6mil sum for every project. During that time, 68 projects were approved to raise the investment capital, leading to the total investment capital in the newly licensed and expanded projects of $2.05bil.

The newly licensed projects mainly focus on industrial and construction sectors (165 projects worth $1.23bil), accounting for 76.7% of the total projects and 75.5% of the total registered capital. There were 44 projects licensed in the service sector, capitalised at $392.6mil.

HCM City continues leading the country in foreign direct investment attraction, where 75 projects worth $698.2mil were licensed (34.9% of the projects and 43% of registered capital). Hanoi follows with 26 projects and the total capital of $455mil. Hai Duong Province in the north came third (6 projects and $95.9mil), followed by Hai Phong City (25 projects, 88.7mil), Dong Nai province in the south (25 projects, $57.6mil), Binh Duong (27 projects, $38mil).

Trade surplus

For the first time, Vietnam witnessed a trade surplus of $56mil in the first quarter of the year.

According to the Ministry of Industry, Vietnam exported $8.569bil worth of products in the first three months, while it imported $8.513bil worth of products. The figure has sparked hopes among management authorities for a reduction of the excess of imports over exports this year.

Economists pointed out that the trade surplus is only temporary, and the ratio of the trade surplus is quite small compared to the export volume (0.7%). The low import quantities in recent months did not represent the big demand for imports of a growing economy as in Vietnam.

Big challenges remain

Officials from the Ministries of Trade and Planning and Investment said that GDP growth rate of 7.2% was lower than that of last year, and all the economic indicators were lower than the targeted levels.

These figures are worrying for the national economy, which means large challenges remain in fulfilling the yearly plan. Concerns have been raised that price increases on several key products (power and petrol) will result in increases for other products and services, thus having a dramatic impact on the consumer price index (CPI).

Exports are forecast for further stormy weather in coming time, as quotas have nearly run out for apparel exports, while footwear exports will slow due to anti-dumping tariffs imposed by the EU on Vietnam-made shoes.

Source: VietnamNet