HÀ NỘI – The first quarter of 2023 saw a decline of 2.2 per cent in the Index of Industrial Production (IIP) compared to the same period last year, due to the impact of the world economy’s challenges on domestic production and business, according to the General Statistics Office (GSO).

Among the sectors, the mining industry recorded the highest IIP decrease with 4.4 per cent. The processing and manufacturing industry followed with 2.4 per cent, while the electricity generation and distribution sector saw a decline of 1 per cent.

However, the water supply, waste-water treatment and management activities witnessed an increase in IIP by 7.8 per cent.

Several essential industrial products showed a decrease in IIP during the first quarter of 2023, including automobiles (17.8 per cent), bar and angle steel (15.8 per cent), motorbikes (13.8 per cent), phone components (13.4 per cent), textiles from natural fibres (13.1 per cent), mobile phones (13.1 per cent), casual wear (10.2 per cent), and cement (9.9 per cent). 

The decline in production of these key products impacted the IIP and value-added of the industrial sector in the first quarter of the year.

The industry’s consumption index also decreased. The consumption index of the processing and manufacturing industry in the first quarter of 2023 decreased by 2.9 per cent year on year.

This led to an estimated inventory of the processing and manufacturing industry in the first quarter, up 19.8 per cent over the same period last year.

That situation showed that enterprises’ production and business efficiency was significantly affected.

According to the General Statistics Office (GSO), IIP in the first quarter of 2023 increased in 48 localities but decreased in 15 localities.

Several localities with IIP achieved a relatively high increase due to the increase of IIP in the processing and manufacturing industry; and electricity generation and distribution industry. They included Cao Bằng (up 26.8 per cent); Tuyên Quang (22.6 per cent); Hải Phòng (14.8 per cent); Quảng Ninh (13.6 per cent); Hải Dương (12.5 per cent); and Nam Định (12.3 per cent).

Some localities had low growth rates or reduction in IIP, such as Quảng Nam (34.3 per cent); Bắc Ninh (18.8 per cent); Vĩnh Long (16.5 per cent); Sóc Trăng (15.6 per cent); and Vĩnh Phúc (8.1 per cent).

The decline in industrial production in the first months of 2023 was due to external and internal factors.

Economic competition and trade wars have been more intense. The Russia-Ukraine conflict has kept the global prices of input fuel, energy and logistics high, affecting the production costs of domestic enterprises.

In addition, inflation is still at a high level. Monetary policy has been tightened, leading to stricter spending in some large consumer markets such as the US and EU. This has caused export orders to decrease, greatly affecting the production of Việt Nam’s enterprises.

Moreover, the reopening of China has created a lot of pressure on countries with similar export products, including Việt Nam.

In the domestic market, purchasing power has resumed, but the recovery has not stimulated production. 

Enterprises still have difficulties accessing capital and face high bank interest rates and input costs of raw materials, especially in the processing and manufacturing industry. The absorption capacity of capital has begun to decrease due to the lack of orders.

Production and business optimism

The majority of surveyed enterprises have provided positive evaluations about the production and business situation in the first three months of this year, according to a report on the operation of enterprises in the first quarter of 2023 recently released by GSO.

Specifically, the survey results on business trends of enterprises in the processing and manufacturing industry in the first quarter of 2023 showed that 24.3 per cent of enterprises rated the production and business situation as better than in the fourth quarter of 2022.

About 37.2 per cent of enterprises said that the production and business situation was stable, and 38.5 per cent of enterprises rated it as having difficulties.

For the second quarter of 2023, 44.1 per cent of enterprises expect the trend to be better than the first quarter, while 35.3 per cent of enterprises said that the production and business situation would be stable, and only 20.6 per cent of enterprises have forecast greater difficulties.

In the first quarter of 2023, Việt Nam had nearly 34,000 newly registered enterprises with total registered capital of VNĐ310.3 trillion, down 2 per cent in the number of enterprises and down 34.1 per cent in registered capital compared to the period last year.

The nation had more than 23,000 enterprises returning to operation, down 10 per cent from the same period in 2022, bringing the total number of newly established and resumed enterprises in the first three months of 2023 to nearly 57,000 enterprises, down 5.4 per cent on the year.

During the first three months, the number of enterprises temporarily suspending business was 42,900 enterprises, up 20.1 per cent over the same period last year. About 12,800 enterprises stopped operating and waited for dissolution procedures, up 13.1 per cent, and 4,600 enterprises completed dissolution procedures, up 6.5 per cent. VNS