Surging economic growth fuelled by production and business

After months of halted operations due to social distancing, a Dien May Xanh supermarket selling electronics and home appliances on Xuan La street in Hanoi’s Tay Ho district has resumed its bustling atmosphere with hundreds of visitors per day.

“Sales have begun to bounce back since the Tet holiday. People’s consumption is on the rise, and our revenue in the first three months of 2022 is gradually recovering as it did in the same period last year,” a salesman at the supermarket said. “Previously, sales were very slow.”

Another Dien May Xanh supermarket, located about two kilometres from this one, has also opened its doors since mid-September of last year. In the first quarter of 2022, it saw more purchases per day than the previous year.

“Revenue is beginning to increase though sales have yet to fully recover as previously,” said a saleswoman at the supermarket. “TVs and refrigerators have seen the biggest sales, followed by home appliances.”

An HC supermarket, also selling similar items, based on Hanoi’s Pham Van Dong Street, has also been seeing its difficulties ease thanks to sales bouncing back over the first three months of the year, with many customers each day buying laptops and mobile phones, refrigerators, and air conditioners.

“Previously we sold one or two refrigerators a day, but now the figure is nearly tenfold. This also means our incomes have also increased,” a saleswoman said.

According to the General Statistics Office (GSO), the government’s Decision No.128/NQ-CP dated October 11, 2021, on safe and flexible adaptation and effective control over COVID-19 and its efforts to increase vaccinations nationwide have helped enterprises to rebound.

On the rise

The GSO reported that despite COVID-19 lingering and the negative impacts of global oil price hikes, almost all economic sectors in the economy are gradually regaining their momentum for further growth since early this year.

For example, state-owned Vietnam Oil and Gas Group (PetroVietnam) has reported that its total revenue in the first three months of the year is estimated to be over 158 trillion VND (6.87 billion USD), up 32 percent year-on-year.

The group exploited 2.85 million tonnes of crude oil, up 5 percent year-on-year, and produced 457,700 tonnes of nitrate, up 11 percent. Its fertiliser sale grew 17 percent, assorted fuel up 7 percent, crude oil by 5 percent, condensate by 357 percent, and polypropylene by 3 percent.

Notably, PetroVietnam’s export turnover totalled 792 million USD, up 71 percent. Its three-month inventory was also reduced, including liquefied petroleum gas (68 percent), assorted fuel (60 percent), fertiliser (17 percent), and polypropylene (54 percent).

The situation can be seen clearer at Vietnam Electricity (EVN), which last week also reported that all of its activities have increased in the first quarter of 2022 as compared to the same period last year.

Specifically, the gross output of the industry is estimated to be 88.83 trillion VND (3.86 billion USD), up 7.15 percent, while the produced and purchased electricity volume is nearly 60 million kilowatt-hours, up 7.4 percent and commercial electricity totalled nearly 54.47 million kWh, up 7.15 percent. In which, electricity for agro-forestry-fishery climbed 7.73 percent, while the rate is 3.34 percent for construction and industrial activities, 13.6 percent for households, and 1.55 percent for trade and hotels.

EVN’s total revenue from electricity sales is estimated to be over 101.41 trillion VND (4.4 billion USD), up 9.26 percent year-on-year.

Petrol and electricity are vital to production activities, especially manufacturing and processing which create 80 percent of Vietnam’s industrial growth – the key growth driver of the economy.

According to the GSO, in the first quarter of this year, Vietnam’s industrial production continued to strongly recover, with the whole sector’s added value increasing 7.07 percent year-on-year – including a year-on-year rise of 7.79 percent in manufacturing and processing.

“Electricity production and distribution climbed 7.42 percent year-on-year, while water supply and waste treatment and management expanded 6.54 percent, and mining was up 1.23 percent year-on-year,” said the GSO.

Bouncing back

The economy grew 5.03 percent year-on-year in the first quarter of 2022, which is higher than the year-on-year rise of 4.72 and 3.66 percent over the same periods of 2021 and 2020, respectively. Of which, the year-on-year growth rate was 2.45 percent for the agro-forestry-fishery sector, 6.38 percent for the construction and industrial sector, and 4.58 percent for the service sector. These sectors created 5.76, 51.08, and 43.16 percent of economic growth, respectively.

Since March 15, 2022, the Vietnamese government has lifted some mobility restrictions to recover the tourism industry, which has been seriously affected by the health crisis.

On the same day, the government also issued a resolution to grant a visa exemption of 15 days to citizens from 13 countries including Germany, France, Italy, Spain, the UK and North Ireland, Russia, the Republic of Korea, Japan, Denmark, Sweden, Norway, Finland, and Belarus upon arrival to Vietnam. The policy of visa exemption will be applied until the end of March 14, 2025.

In 2019 when COVID-19 had not yet occurred, the tourism industry created 24.1 billion USD of GDP and expanded 22.7 percent during the 2015-2019 period. Vietnam received a record number of over 18 million foreign visitors in 2019. In 2020 and last year, the number of international arrivals in Vietnam plunged by 78.7 and 95.9 percent, respectively, largely due to the pandemic.

Vietnam also lifted restrictions on the frequency of regular international flights from February 15. This will make it easier for investors to come to Vietnam to implement their projects.

The GSO reported that in the first quarter of this year, the total disbursement of foreign investment is estimated to be 4.42 billion USD, up 7.8 percent year-on-year – the highest three-month disbursement level over the past five years.

According to global data analyst and provider FocusEconomics, Vietnam’s GDP is projected to grow at the fastest rate in the region this year, following 2021’s relatively weak expansion.

“Looking ahead, industrial production is projected to accelerate significantly this year from 2021’s average level, as the pandemic abates and associated restrictions are eased. Moreover, the underlying strength of Vietnam’s industrial sector remains intact: Vietnam is an attractive low-cost base for manufacturing firms, including those looking to relocate from China due to the US-China trade tensions. Our panellists estimate that industrial output will grow 10.5 percent in 2022, and expand 8.3 percent in 2023,” FocusEconomics said.

FocusEconomics expects GDP to expand 6.9 percent in 2022 and 6.9 percent in 2023.

According to the GSO’s Q1 survey of nearly 5,500 manufacturing and processing businesses nationwide, 28.4 percent of respondents said their Q1 performance is better than in Q4 of 2021. For Q2 of 2022, 50 percent said their performance will be better than Q1 – in which 84.7 percent of foreign enterprises said so, while these rates are 83.6 and 81.2 percent at state-owned enterprises and domestic private enterprises, respectively.

The salespeople at HC and Dien May Xanh supermarkets told VIR that they believe the economic situation will get better, meaning they will be able to sell more goods and earn more money.

“In Q1, it was estimated that our team’s revenue had nearly doubled from Q4 of 2021, and this is very encouraging,” said the salesman at the HC supermarket. “We are making plans to continue increasing revenue over the next quarters thanks to more convenient conditions.”