No signs of deflation, economic recovery well on track: Gov’t
Tuesday, December 02, 2014, 15:30 GMT+7
There is no sign that the local economy has slipped into deflation, though the headline consumer price index (CPI) in November witnessed a negative growth after months of growing at a very slow pace, said a senior state official at a press briefing after a recent monthly meeting of the government in Hanoi.
The 0.27 percent CPI decrease last month has sparked fears of deflation, but what the government has realized is continuous macroeconomic stability and the recovery of economic growth, said Minister Nguyen Van Nen, head of the Government Office in the press briefing on Monday evening.
The regular press conference came after the government spent an entire day in the meeting on the socioeconomic situation in November.
"All the government members agreed that the socioeconomic situation in November 2014 continues to change, achieving positive results in most areas," Minister Nen said.
According to Nen, growth was restored in all sectors, mainly with higher GDP growth than the same period two years ago, and he predicts GDP growth in 2014 will likely reach the goal of 5.8 percent.
"Inflation was well under control, and the CPI fell by 0.27 percent in November compared to last month,” the Minister asserted, adding that the CPI decrease was mainly due to a sharp fall in fuel prices and cooking gas prices, following the global trend, rather than reflecting a purchasing power decline.
Total retail sales and consumer services revenues continue to improve, with demand in November 2014 higher than that of a year ago, Nen said without citing specific figures.
In addition, the index of industrial production and credit continued to increase, while the interest rate fell slightly by 0.1-0.5 percent.
At the press conference, Deputy Governor of the State Bank of Vietnam Nguyen Thi Hong said the current lending rate has fallen back to that of the 2005-2006 period, and was no longer an obstacle for local businesses to boost lending.
Improving business situation
The latest report from the Department of Business Registration under the Ministry of Planning and Investment showed that in the first 11 months of this year 14,208 enterprises which were dissolved previously returned to the market, an 11.8 percent rise compared to the same period in 2013.
Specifically, the figure in November was 1,205, up 6.5 percent from the previous month.
According to the department, this is an encouraging figure showing that the economy has created more investment opportunities for local businesses.
However, in the past 11 months there were 60,340 enterprises that were forced to suspend operations or dissolve, up 9.8 percent compared to the same period last year.
Of these, 8,661 have now completed procedures for dissolution, while 10,147 businesses registered to suspend operations indefinitely, and 41,532 have been decommissioned, pending the closing of business. In November, 7,033 have suspended or terminated operations.
The number of firms suspending operations or dissolving was double the amount of newly registered businesses. Accordingly, in the first 11 months of the year, there were 67,790 new enterprises with total registered capital of VND391.3 trillion, down 4.5 percent in volume and 8.9 percent in value over the same period years ago.
Meanwhile, the number of newly established enterprises tended to rise, and the number of decommissioned ones fell.
Specifically, in November, the number of newly established enterprises was up 13.7 percent in quantity and 20.8 percent in registered capital compared to the previous month.
In contrast, the number of enterprises closing down fell by 1.5 percent.
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The headline seasonally-adjusted Purchasing Managers’ Index (PMI) – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – rose to 52.1 in November, up from 51.0 in October, and signaled the most marked improvement in business conditions in five months. Stronger operating conditions have been recorded in each month since September 2013. Growth in the Vietnamese manufacturing sector regained momentum in November as output and new orders rose at faster rates and stocks of purchases increased at the sharpest pace in the survey’s history. Falling prices in world commodity markets influenced the sector, with input costs decreasing for the first time since late 2012 and output prices falling at the sharpest rate since June 2013. Manufacturing production in Vietnam increased for the fourteenth successive month in November, with the rate of growth quickening to the fastest since April. Commenting on the Vietnam Manufacturing PMI survey, Trinh Nguyen, Asia Economist at HSBC said: “The sharp rise of the PMI index in November reflects our view that Vietnam’s manufacturing sector is competitive. Thanks to lower labor costs than China, Vietnam manufacturing is gaining global market share.” "The contraction of input prices mirrors the drop of headline CPI to 2.6 percent y-o-y in November. We expect output to continue to rise, in contrast to the rest of the region,” Nguyen added. |
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