29-2-2024 (HANOI) Government data released on Thursday showed a significant decline in Vietnam’s exports and industrial production in February compared to the same period last year. Economists attribute the drop to the week-long Lunar New Year celebrations, known as Tet in Vietnam, rather than the recent Red Sea shipping crisis.
Preliminary estimates from the General Statistics Office (GSO) revealed that exports fell by 5% and industrial production contracted by 6.8% in February compared to a year earlier. Vietnam, heavily reliant on exports, is a key trading partner for the United States and European Union countries.
While disruptions in shipping caused by Houthis’ attacks in support of Palestinians fighting in Gaza have increased costs for cargoes from Vietnam by 55%-73%, economists believe the February performance was primarily impacted by the timing of the Lunar New Year holiday. Economist Vo Tri Thanh, based in Hanoi, stated that the statistical comparison was affected as the holiday fell in January in 2023. Thanh warned of risks posed by the Red Sea turmoil but emphasized that the data for the first two months of 2024 still showed positive trends.
Preliminary estimates indicated that both exports and industrial production experienced healthy growth in the first two months of 2024 compared to the same period last year, primarily driven by a significant expansion in January. Exports for January and February rose by 19.2% to $59.34 billion, while imports increased by 18% to $54.62 billion, resulting in a trade surplus of $4.72 billion.
The GSO reported a 5.7% rise in the industrial production index for the January-February period compared to a year earlier, a notable improvement from the 2.9% decline in the same period last year.
Darren Tay, an analyst at BMI Research, commented that the sharp drop in exports and industrial production in February is typical for Vietnam during the Tet holiday and that it is too early to determine the impact of the Red Sea turmoil.
Can Van Luc, a government adviser and economist at the Bank for Investment and Development of Vietnam, stated that the crisis’s impact on Vietnam’s exports remains limited.
In other economic indicators, the GSO reported a 3.98% increase in consumer prices in February compared to a year earlier. Additionally, retail sales rose by 8.5% in the month compared to the previous year.
