Overview
Vietnam’s economy in the second quarter of 2021 takes place in the context of the positive sign of economic recovery while the biggest vaccination campaign in history is underway. However, rising inflation and financial risks in some major economies have affected investment, production and import and export activities in general.
“Despite the ongoing pandemic, the economy has grown stronger thanks to the government’s major efforts in curbing the pandemic, and enterprises’ growing confidence in the domestic business and investment climate which is increasingly improved,” said the General Director of the General Statistics Office in press release Vietnam’s socio-economic situation in the second quarter and six months of 2021.
Despite the country’s worst Covid 19 outbreak in the past few months, gross domestic product (GDP) in the second quarter of 2021 was estimated to increase by 6.61% over the same period last year, slightly falling behind the projection of 7.11% but higher than the growth rate of 0.39% in the second quarter of 2020 and lower than the growth rate of 6.73% of the second quarter of 2018 and 2019. In particular, the agriculture, forestry and fishery sector increased by 4.11%; the industrial and construction sector grew by 10.28%; the service sector increased by 4.30%. Growth picked up on increases in industrial output as demand recovered in global markets, and as favourable weather boosted agricultural products. Increased government spending also helped drive the expansion.
Agriculture, forestry and fishery production
Agriculture, forestry and fishery production in second-quarter 2021 is remaining the recovery and positive achieved relatively. High crop yields, livestock recovered well. Seafood exports show signs of recovery, especially two products that are Vietnam’s strengths: pangasius and shrimp.
Generally, the agriculture, forestry and fishery sector accounts for 12.15% of GDP structure in the first half of 2021. In the first six months of the year, the export of agricultural, forestry and fishery products still increased sharply, reaching USD 24.23 billion, exceed the set plan and an increase of 28.2% over the same period in 2020. With 70 % of the population living on agricultural activities, this number is indicating the nation’s economic recovery. In which, export of main agricultural products reached USD 10.40 billion (rose 13.3%); seafood reached USD 4.05 billion (rose 12.5%); forest products reached USD 8.7 billion (rose 61.5%).
According to the Ministry of Agriculture and Rural Development, the four largest import markets for Vietnam’s agricultural, forestry and fishery products are China, the US, Japan and South Korea. In which, exports to the US increased sharply to about USD 6.7 billion (an increase of 59.8% over the same period in 2020 and accounted for 27.9% of total export value).
To achieve the positive results, the agricultural sector has implemented a series of solutions such as promoting the opening of agricultural markets to countries such as Peru, Australia, etc.; actively conducting research, forecast and taking advantage of FTAs to promote agricultural product exports; coordinating with Vietnamese embassies and trade offices in other countries to build channels for exchanging and providing information on key export markets such as Japan, South Korea, the United States, EU and China, etc.
Industrial production
Industrial production in the second quarter of 2021 grew quite well because business activities of enterprises were maintained and gradually recovered, the growth rate of added value reached 11.45% over the same period last year.
Generally, in the first 6 months of 2021, industrial production was estimated to increase by 8.91% higher than the growth rate of 5.06% of the same period in 2020. In which, the processing and manufacturing industry increased by 11.42%; electricity production and distribution increased by 8.16%; the water supply and waste and wastewater treatment industry increased by 6.75%; the mining industry decreased by 6.61% (due to a decrease in crude oil production by 7.3% and a decrease in gaseous natural gas by 12.5%), reducing the overall growth.
Among the secondary industries, a number of key industries had a high production index in the first six months compared to the same period last year. Metal production grew by 38%; motor vehicle production 35%; production of beds, wardrobes, tables and chairs 18.3%; and production of electronic products, computers and optical products 15.5%.
According to the Ministry of Industry and Trade, positive results have been achieving due to seriously implement COVID-19 prevention measures at industrial parks and export processing zones. However, the complicated development of the COVID-19 pandemic from the end of April, which directly affected a number of industrial zones in the two provinces of Bắc Giang and Bắc Ninh still caused many concerns for companies and investors.
Imports & exports
Export turnover
In the second quarter of 2021, export turnover reached 79.23 billion USD, grew by 33.5% over the same period in 2020 and rose by 1.1% compared to the first quarter of this year. Generally, in the first six months of 2021, the export turnover was estimated at 157.63 billion USD, rose by 28.4% over the same period in 2020, of which, the domestic economic sector was 40.89 billion USD, went up 16.8%, accounting for 25.9% of total export turnover; the FDI sector (including crude oil) attained 116.74 billion USD, increased by 33%, sharing 74.1%
The USA was Viet Nam’s largest export market, a growth of 42.6% over the same period last year; the following was China market, going up by 24%; The EU, rose by 17.4%; ASEAN market, an increase of 26%; South Korea, an increase of 14.7% and Japan, increased by 6.9%.
Import turnover
In the second quarter of 2021, the import turnover reached 83.5 billion USD, rose by 45.7% over the same period in 2020 and grew by 10.4% compared to the first quarter of this year.
The structure of imported goods includes machinery, equipment, accessory, means of transport and components; fuel and raw materials and consumer goods. China remained the largest import market of Viet Nam with a turnover, the following was the South Korean, ASEAN, Japan, EU and the United States.
According to the cycle, imports of manufactured goods usually increase at the beginning of the year and decrease in the second half of the year while exports peak in the second half of the year. It is forecasted that import and export activities will continue to prosper in the coming time when free trade agreements such as CPTPP, EVFTA, UKFTA are gradually being implemented more comprehensively. Vietnamese goods penetrate into the partner markets with preferential tariffs, thereby promoting strong export growth in both value and price. The gradual or complete lifting of blockade orders in European and American countries will be the driving force to stimulate the export market of consumer goods, which is Vietnam’s strength.
The solutions to prevent the Covid-19 epidemic have been strongly, synchronously, flexibly and effectively implemented has been also brought positive results to service industry groups, business activities, and especially in business investment activities. We will return with a summary of the performance of these sectors as well as updates on Vietnam’s economic inflation index and investment outlook in the second half of 2021.
Explore more at : Vietnam’s economic Review Q2 2021, Vol. II
