Enterprises hasten production after holidays, signaling recovery in 2024

February 26, 2024 - 08:08
Việt Nam's economy will be boosted by increased production and higher consumption this year, thanks to improvements in employment in the manufacturing sector.
The garment and textile industry is seeing positive signals in orders after a difficult year. Export is expected to improve and drive economic growth this year. — VNA/VNS Photo Trần Việt

HÀ NỘI — Factories are hastening production from the first months of this year with improvements in orders coupled with tailwinds from improved consumption which are creating optimism for economic recovery after a long difficult period.

Unlike what happened in 2023, the garment and textile industry is seeing positive signals.

Vinatex Đà Nẵng returned to work right after the Tết Lunar New Year Holiday. The company’s director Nguyễn Tiếp Hiệp said they now had enough orders to ensure jobs for workers to the end of July, adding that the company would increase searches for orders, recruit more workers and increase incomes by VNĐ1-2 million per employee per month this year.

Simexco Đắk Lắk is hastening production and striving to complete 500 containers for export, mainly coffee, in two weeks after the traditional holiday. Lê Thanh Sơn, the company’s director said that the company targeted to export 125,000 tonnes of coffee this year.

Lộc Trời Group has also won a bid to export 60,000 tonnes of rice to Indonesia. The group has received export orders for the first half of this year.

Industrial production increased by 18.3 per cent in January. Export jumped by 42 per cent. These are positive early signals, Minister of Industry and Trade Phạm Hồng Diên said. Still, he added that the improvement is largely dependent on global political and economic developments.

According to VinaCapital chief economist Michael Kokalari, production accounted for nearly 25 per cent of Việt Nam’s gross domestic product (GDP), meaning that improved production will accelerate GDP growth.

Vietnamese economy will be boosted by increased production and higher consumption this year, thanks to improvements in employment in the manufacturing sector. Consumer confidence and domestic demand, which were weak in 2023 due to layoffs and real estate industry problems, will recover significantly.

Although consumer spending is not expected to grow strongly in the first quarter, it will be stronger in the latter half of this year.

Gabor Fluit, Chairman of the European Chamber of Commerce in Việt Nam (EuroCham), said that Việt Nam had emerged as a leading destination for investments, signalling the economic recovery on a wide scale. The prospect was promising but it would still require cautious observation, he said.

The business confidence index is still below average and more than one third of enterprises expected inefficient operation.

Minister of Planning and Investment Nguyễn Chí Dũng said risks were forecast to remain in 2024 from the world political and economic environment which would cloud Việt Nam’s economic recovery prospect.

The situation required prompt response and adaptation to take advantage of opportunities for breakthrough development and fuel growth momentum such as green economy, green growth, digital economy and circular economy in order to enhance internal capacity and economic resilience, he said.

He emphasised that the priorities should be on accelerating economic recovery, stabilising macroeconomic situation, controlling inflation and ensuring major balances. The focus would be placed on three drivers, including investment, export and consumption.

He said that it was necessary to keep a close watch on global and domestic developments to have timely response measures, besides continuing the implementation of support policies such as tax reductions and exemptions.

In addition, appropriate credit policies were needed to provide capital for the economy, direct capital flow into production and business, prioritised sectors and those which create growth momentum.

Credit institutions would be encouraged to cut costs and simplify lending procedures to further reduce rates and improve access to credit.

Tô Hoài Nam, Deputy President of Việt Nam Association of Small and Medium Sized Enterprises, said enterprises were optimistic about the economic recovery this year on the solutions of improving the business environment, enhancing national competitiveness and eliminating business barriers.

According to Jonathan Pincus, chief economist of the United Nations Development Programme (UNDP) in Việt Nam, the GDP growth target of over 6 per cent is achievable. Exports will remain the main driving force this year.

He added that many foreign investors were showing interest in investing in Việt Nam, especially in high-tech industries such as semiconductors and computer equipment which were positive signs. These investments would create significant momentum for growth when realised, he said. — VNS