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Falling demand to hit production

Update: January, 14/2012 - 09:15


A cotton fibre production line at Son Nam Textile and Garment Co in the northern province of Nam Dinh. This year will be tough for domestic producers due to a decreasing demand in the wake of prolonged economic difficulties. — VNA/VNS Photo Danh Lam
HA NOI — The General Statistics Office urged producers to be cautious as both production and consumption have been forecast to face difficulties this year.

The office reported that last year's consumption index of the manufacturing industry surged 15 per cent over the previous year's, while its inventory index rose sharply by 23 per cent.

"Within manufacturing inventory indices, pottery surged up to 96.8 per cent compared with 64.1 per cent for cement, 57 per cent for fertiliser, 55.6 per cent for plastic products and 53 per cent for paper products," noted the office.

The inventory indices of vegetable and fruit processing, tobacco, the auto industry, livestock feed, steel and iron, seafood processing and cloth production also surged sharply – ranging between 25-49 per cent.

Statistics from the first three quarters of 2011 also showed that the total inventory volume of listed enterprises surged more than 30 per cent over the same period of the previous year.

Vu Dinh Anh from the Ministry of Finance's Institute of Finance and Price attributed the high inventory index to the decrease in demand due to high inflation, which caused local consumers to tighten their belts.

Anh also anticipated that the country's economy this year would face not only high inflation but also a further slowdown in production and consumption.

"Falling consumption will cause production to decline. The commodity shortage will in turn bring about a rise in imports and smuggling," Anh said.

To aid producers, experts have recommended that the Government cut interest rates, which would help lower input costs.

Former Governor Cao Sy Kiem said if the high interest rates lasted an additional five or six months, a series of enterprises would go bankrupt and others would be placed under significant strain. Now was the time to lower the lending interest rates, Kiem said.

Prime Minister Nguyen Tan Dung in a recent meeting with the banking industry also required the State Bank of Viet Nam to cut interest rates starting early this year, as inflation was kept under 1 per cent for the past six months. — VNS

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