Vietnam’s Industrial Production Accelerates: Which Sectors Could Benefit?

Vietnam’s industrial production index rose 15% year on year in October, bringing growth for the first 10 months to 12.4%, the highest increase for the same period since 2019. Yuanta Securities Vietnam said in its November macroeconomic report that electronics, metals, automobiles and building materials were the main drivers. It said demand for semiconductors and artificial intelligence, factory expansions by foreign-invested companies and public investment supported industrial production.

Production at a foreign-invested company in an export processing zone in Ho Chi Minh City.（VietVance）

In the first 10 months, disbursed foreign direct investment in Vietnam reached $24 billion, up 13% year on year and the highest for the same period in five years; registered investment reached $54.8 billion, up 74%. A report by the research division of An Binh Securities showed that manufacturing and processing received about $19.9 billion in disbursed foreign investment, nearly 83% of the total. Securities firms said industrial park operators and construction, building materials and logistics companies could gain more business, though the extent of the benefit depends on whether projects proceed on schedule.

Chart showing trends in Vietnam’s industrial production index and purchasing managers’ index.（VietVance）

Public investment is also supporting construction and building materials. In the first 10 months, Vietnam implemented 783.9 trillion dong in public investment, up 19.8% year on year and equivalent to 69% of the annual plan. About 31% of the plan remains to be carried out in the final two months of the year, and project progress will affect how quickly the funds translate into company revenue.

The recovery across export industries is uneven. Vietnam’s exports rose 51.4% year on year in October, while total import and export turnover exceeded $1 trillion for the first time in the first 10 months. Yuanta Securities Vietnam said export growth still relied heavily on electronics and foreign-invested companies. Textile and garment exports totaled $33.74 billion in the first 10 months, up 2.2% year on year; seafood exports rose 11.5%. The firm maintained a neutral view of textiles and garments and was selectively positive on seafood.

Chart showing monthly data for 10 categories of Vietnamese exports.（VietVance）

Domestic consumption is creating opportunities for retail and services. In the first 10 months, Vietnam’s retail sales of goods and service revenue exceeded 6,600 trillion dong, up 13.5% year on year; growth was 7.7% after excluding price effects. However, the consumer price index rose an average of 4.57% over the same period. The research division of An Binh Securities warned that commercial loan interest, financing costs and raw material costs could continue to weigh on business operations.

Source: VietVance