Vietnam's Recovery Remains Fragile

By VU TRONG KHANH and NGUYEN PHAM MUOI

HANOI -- Vietnam showed further signs of emerging from the economic crisis Tuesday, as industrial production, oil output and retail sales continue to rise, but a sustainable recovery remains fragile.

Industrial production in July was forecast to grow 7.6% from a year earlier to 59.07 trillion vietnamese dong ($3.38 billion), according to preliminary data published Tuesday by the General Statistics Office.

Output rose 21.96% in June versus the previous month and 8.2% from a year earlier to VND58.38 trillion, the GSO said. For the first seven months of 2009, Vietnam's industrial output is projected to rise 5.1% on year to VND382.66 trillion.

Earlier this month, Deputy Minister of Industry and Trade Bui Xuan Khu said Vietnam will try boosting industrial production in the second half to ensure growth of not less than 10% for the whole year.

Consumers are also continuing to show resilience, with retail sales of goods and services expected to rise 18.3% in the first seven months of the year to VND643.64 trillion from a year earlier, the GSO said.

The Ministry of Industry and Trade said earlier this year that total retail sales of goods and services in 2009 are expected to rise 25.1% to VND1,210 trillion.

"The economic crisis has left little impact on the consumption of the middle class. They still travel and spend money," said Vo Tri Thanh, an economist with the government's Central Institute of Economic Management.

The Vietnam government has poured billions of dollars into the economy since the start of the global economic crisis. But analysts say a return to higher growth also depends largely on the health of its trading partners, who consume everything from coal and oil to textiles and farm produce.

In June, Vietnam revised down its 2009 gross domestic product growth target to 5% from 6.5% set previously.

Exports are projected to fall 27.4% on year to $4.75 billion in July, while exports between January and July are expected to drop 13.4% to $32.35 billion.

"We still have to stick to the economic stimulus package as there is still a big gap between actual growth and potential growth and the world recovery is weak," said Mr. Thanh.

He said the government needs to pay more attention to stabilizing macroeconomic factors, but also needs a strategy to gradually withdraw the state's "massive interference" in the economy.

Meanwhile, Vietnam's crude oil production in July is estimated to have grown 18.5% compared with last July, to 1.4 million metric tons, or 340,254 barrels a day. In June, the country produced 1.4 million tons of crude, or 346,220 barrels a day, according to revised government figures. Production of crude oil between January and July is estimated up 18.1% to 10.1 million tons, the GSO said.

Natural gas production is estimated at 644,000 cubic meters in July, down 2.3%. The GSO forecast a 28.5% on-year rise in liquefied petroleum gas output, to 25,700 tons, in July.

Coal production, however, likely fell 3.5% on year in July to 3.6 million metric tons. The figure represents a 9.8% fall from 4 million tons produced in June, according to revised GSO data.

The country produced an estimated 24.9 million tons in the January-July period, down 1.7%.

Electricity output in July is projected to have risen 15% on year to 7.2 billion kilowatt-hours, the GSO said.

In June, Vietnam also produced 7.2 billion kWh.

Between January and July this year, Vietnam produced an estimated 44.9 billion kWh, up 9.6% from the same period last year.