Which industries suffer most in economic downturn?

Which industries suffer most in economic downturn?

Processing and manufacturing prove to be the ones that have been distressed most in the last four months, according to the Ministry of Planning and Investment (MPI).

Manufacturing industry falls into decay

A report by MPI has pointed out that the industrial production in the first four months of 2012 met a lot of big difficulties, especially small and medium enterprises. Manufacturing and processing enterprises witnessed the lowest growth rate in comparison with other sectors, at 3.2 percent in the first quarter, while it was 13.4 percent the same period of the last year.

The index of industrial production IIP in the first four months of 2012, which grew by 4.3 percent over the same period of the last year, was the lowest growth rate in the last three years.

Especially, mining industry saw the modest growth rate of 2.6 percent, the processing and manufacturing industries, which make up 75 percent of the added value of the whole industrial sector, increased by 3.8 percent. Meanwhile, the electricity, gas and water production and distribution increased by 14 percent.

The biggest problems now for the industrial production are the high input costs and low demand. The stock level by April 2012 of the processing and manufacturing industries had increased by 32 percent in comparison with the same period of the last year.

The products that have the highest inventory indexes include fertilizer (+ 63.4 percent), cement (+ 44.2 percent), motors (+ 38.9 percent), garment (+ 35.6 percent), plastics (+ 102 percent).

The trade gap in the last four months of the year stayed at low level of 176 million dollars, much lower than the 4.5 billion dollar level of the same period of the last year. If noting that Vietnam needs to import materials in big quantities for domestic production, the low trade gap figure showed that the production has been scaled down.

Real estate, construction sector saw profits down sharply

3798 enterprises were registered in the real estate sector in the first four months of the year, while 212 new businesses were set up in the construction sector, which represented the sharp falls of 23.9 percent and 54.8 percent, respectively, in comparison with the same period of the last year.

Meanwhile, the percentage of construction enterprises has been on the rise: 16 percent of enterprises in the sector got dissolved in 2011, accounting for 3.9 percent of operational enterprises. The figures were 0.1 percent and 4.7 percent, respectively, for the real estate sector.

In 2011, the ROE (return on equity) of the construction and real estate industries dropped by 12 and 7.46 percent, respectively, which was explained by the credit tightening and public spending cut policies.

Seafood exports meet too many difficulties

Seafood exporters have been warned about a tough period, since the EU, the biggest export market for Vietnam, remains gloomy. A series of big enterprises have incurred big losses or got bankrupted. As the material prices fluctuate, farmers have given up farming. Meanwhile, the epidemics, the lack of capital due to overly high bank loan interest rates both have led to the sharp fall of the supplies.

All that factors would badly affect the seafood export in the time to come. The livestock feed price increases have also put hard pressure on farmers.

The bright parts of the picture

The tourism industry has created the only bright part of the picture in the national economy. In the first quarter of 2012, Vietnam received 1.8 million foreign travelers, up by 24.5 percent in comparison with the same period of the last year.

Wooden furniture manufacturing has also recovered after a difficult period with the wooden furniture exports reaching 1.4 billion dollars, an increase of 25 percent over the same period of 2011.

vietnamnet