October 2024: Positive Domestic Economic Growth Despite Storm Disruptions in September

• Industrial Production Index (IIP): The industrial sector rebounded with a 3.99% month-on-month increase in October, reversing the 0.19% decline in September. Notably, industrial production in storm-affected provinces such as Quang Ninh and Hai Phong rose sharply, by 25.2% and 19.8% month-on-month, respectively.

  
  

• Purchasing Managers’ Index (PMI): Vietnam's manufacturing PMI climbed to 51.2 in October, up from 47.3 in September, driven by a recovery in purchasing activities, including output and new orders.

  
  

• Exports: Total exports reached nearly USD 35.6 billion, up 4.6% month-on-month and 10.2% year-on-year. Exports to the EU were particularly strong, rising by 22.2% month-on-month and 28.6% year-on-year.

  
  

• Foreign Direct Investment (FDI): Disbursed FDI totaled nearly USD 2.25 billion, an increase of 7.6% year-on-year. Newly registered and additional capital reached USD 2.38 billion, with most major projects featuring high technological content.

  
  

• Corporate Bonds: No new delayed bond payments were recorded in October. Cumulatively for the first 10 months of 2024, total new delayed bonds amounted to VND 16.6 trillion, a significant drop from VND 137.6 trillion in the same period last year.

Key Financial Market Developments in October and Early November:

• USD/VND Exchange Rate: The exchange rate surged after three months of cooling, fully recovering the Q3 decline to reach a record high of 25,512 VND/USD on November 15, up 4.47% year-to-date. On the black market, rates peaked at 25,900 VND/USD.

  
  

• Deposit Rates: Commercial banks raised deposit rates in early November, with typical increases ranging from 0.1% to 0.2% annually. According to the State Bank of Vietnam, rising deposit rates and year-end credit demand may exert upward pressure on overall interest rates.

  
  

Outlook:

Economic growth in the final two months of 2024 is expected to remain robust, supported by strong consumer demand, export orders, and effective management of exchange rates and interest rates. However, escalating exchange rate pressures may pose challenges, especially if the USD Index continues its upward trend, while the State Bank's capacity for intervention diminishes.

Export prospects for 2025 face potential hurdles:

• Global Political and Economic Uncertainty: The reelection of U.S. President Donald Trump may create opportunities in U.S.-Vietnam trade but also introduce significant challenges. Policies to reduce reliance on China may benefit Vietnam but intensify global competition with low-cost Chinese goods.

  
  

• Samsung’s Sales Decline: Samsung’s anticipated revenue drop and workforce reductions could negatively impact Vietnam’s overall export performance next year.