Strong industrial performance fuels economic momentum amid headwinds

Strong industrial performance fuels economic momentum amid headwinds

Vietnam’s industrial production surged 9.2 per cent in the first half of 2025, marking its strongest growth since 2020 and reinforcing its role as a key economic driver.

The figure was revealed at a press meeting chaired by the National Statistics Department under the Ministry of Finance to announce Vietnam’s socioeconomic statistics for the second quarter and the first half of 2025 on July 5 in Hanoi.

The fresh data shows that despite ongoing global economic challenges, the country’s industrial sector has maintained strong momentum.

Specifically, the industrial production index (IIP) for Q2 is estimated to have grown by 10.3 per cent on-year, with the manufacturing and processing sector expanding by 12.3 per cent.

The Industrial production index saw a sharp jump in many localities, with pre-merger Phu Tho province taking the lead at 46.6 per cent

Overall, for the first half of 2025, the IIP rose by 9.2 per cent on-year- outperforming the 8 per cent hike seen in the same period of 2024 and marking the most significant increase since the start of the decade.

Between 2020 and 2025, the on-year growth in the six-month IIP was as follows: 2.8 per cent in 2020, 9.0 per cent in 2021, 8.4 per cent in 2022, contracted 1.4 per cent in 2023, resuming 8.0 per cent growth in 2024, and 9.2 per cent growth in 2025.

The manufacturing and processing sector remains the primary growth engine, registering an 11.1 per cent increase in H1 of 2025 compared to a 8.9 per cent hike in the same period last year, contributing 9.1 percentage points to overall IIP growth.

Meanwhile, the electricity production and distribution sector rose by 4.5 per cent, adding 0.4 percentage points, and the water supply, waste management and wastewater treatment sector increased by 11.3 per cent, contributing 0.2 percentage points.

Notably, the positive growth trend was widespread. Along with this, after six months, 62 out of 63 localities. prior to the recent administrative merger, reported an on-year increase in their industrial production indices.

The only exception was Ba Ria-Vung Tau province (now part of Ho Chi Minh City), which saw a 2.6 per cent decline.

Several provinces posted particularly strong gains thanks to a robust performance in manufacturing and electricity-related industries.

Phu Tho’s manufacturing sector surged by 46.6 per cent in the first half of the year, followed by Nam Dinh at 33 per cent, Bac Giang 27.5 per cent, Thai Binh 25.3 per cent, Ha Nam 22.8 per cent, and Vinh Phuc 18.8 per cent.

The slower industrial growth in Ba Ria-Vung Tau weighed on the gross regional domestic product (GRDP) of the newly expanded Ho Chi Minh City (post-merger with Binh Duong and Ba Ria-Vung Tau provinces), which grew by only 6.56 per cent in the first half of 2025. The GRDP of pre-merger Ho Chi Minh City was 7.82 per cent.

Regarding the national industrial production picture, the National Statistics Department highlighted several key products that recorded sharp growth in the first half of 2025 compared to the same period in 2024.

These include automobiles, which grew 70.2 per cent; televisions, up 21.9 per cent; NPK compound fertiliser, up 18.9 per cent; liquefied petroleum gas (LPG), up 16.9 per cent; casualwear, up 14.9 per cent; cement, up 14.8 per cent; leather footwear, up 14.3 per cent; and steel bars and angles, up 13.9 per cent.

The consumption index for the manufacturing and processing sector in June rose by 0.6 per cent on-month, and by 10.1 per cent on-year.

For the first six months of 2025, the sector’s consumption index increased by 9.8 per cent compared to the same period in 2024.

However, the average inventory rate across the manufacturing and processing sector reached 85.7 per cent in the first half of 2025, higher than the 76.9 per cent hike recorded in the same period last year.

The higher inventory level could potentially impact the operational efficiency and profitability of manufacturing businesses.

At the press meeting on July 5, Nguyen Thi Huong, director general of the National Statistics Department, noted that Vietnam’s economy and society would continue to face significant challenges in the latter half of the year.

“Given Vietnam’s high degree of economic openness, the country remains vulnerable to unpredictable global developments.

“To achieve the 2025 growth target of 8 per cent and beyond, there must be concerted efforts from the entire political system, the government, businesses, the public, and support from the international community.

All levels and sectors need to bolster forecasting and scenario planning, adopt flexible and responsive policy measures, and remain steadfast in the dual goals of stimulating growth while ensuring macroeconomic stability, inflation control, social welfare, and improved living standards,” Huong stressed.

VIR