Vietnam Update – Aug, 2013

Economic update

Macro economic data showed a number of early sign of a stronger recovery in August.

According to HSBC, The Purchasing Manager Index (PMI) continued to increase from 48.5 in July to 49.4 in August, the highest number since April, driven by faster growth of new orders and employment. The New Orders Index got closer to the 50 level and manufacturing employment continued to improve considerably 52.5, positive signs for manufacturing firms. At the same time, the General Statistics of Vietnam showed that the Industrial Production year-to-date accelerated slightly from 5.2% YoY in July to 5.3% YoY in August. Meanwhile, as we expected, the inventory reduction phase looks as though it is coming to an end, followed by a phase of inventory building, as economic conditions are expected to improve. Domestic consumption gradually strengthened as year-to-date retail sales jumped to 13.5% YoY compared to 12.0% in July or 11.9% in both June and May.

August CPI jumped 0.83% MoM following the surge in government-driven medical and healthcare fees as well as fuel prices. Overall inflation reached 7.50% YoY, and 3.53% YTD1, triggering fears on…

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