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VN’s manufacturing index continues slide in July
The Purchasing Managers’ Index (PMI) of some manufacturing industries in Vietnam continued to decline in July, according to the latest report from the Hong Kong – Shanghai Banking Corp (HSBC).
The seasonally adjusted manufacturing PMI dropped from 46.6 points in June to 43.6 points in July.
The PMI has dropped below the average level of 50.0 points for four consecutive months, and the July indicator has seen the lowest index since the beginning of the survey in April, 2012.
Both the volume and the number of orders in July fell dramatically from April due to unfavorable economic conditions and weak demand of customers, said the report.
The reduction in total new orders has resulted from weak domestic demand, while new export orders slightly decreased due to a drop in export goods to China and falling demand from European markets.
According to the General Statistical Office (GSO), low power demand was the main reason behind July’s 0.29 percent reduction in Consumer Price Index (CPI), compared with that in June.
Thus, this was the second consecutive month that witnessed a month-on-month fall in CPI, which edged down 0.26 percent in June. In a press conference on July 31, Vu Duc Dam, Chair of the Office of the Government, said that the CPI tends to fall in August.
“Strong reduction in production activities reflects weak domestic demand in Vietnam, while customers are not ready to pay and the credit environment is still difficult,” said Trinh Nguyen, an HSBC economic expert.
The reduction in level of employment and purchasing activities showed that this situation may continue in the next few months,” Trinh added.
Rolling up the sleeves
Banks are now boosting consumer loans to increase purchasing activities and to help customers have a reasonable expenditure plan.
For example, the Maritime Commercial Joint Stock Bank (Maritime Bank) will apply a monthly preferred interest rate of 0.68 percent in the first three months for all consumer loans which are disbursed from now until October 23.
The bank has also readied consumer loans with real estate collaterals for people living in Hanoi and Ho Chi Minh City.
Even the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), and the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), which usually focus on corporate loans, will also try to boost consumer loans.
Vietcombank will give business loans and loans for buying and repairing houses through a support package of VND2 trillion with a 12 percent per year interest rate, while BIDV is providing a VND4 trillion capital package supporting customers in buying houses and purchasing goods with a long-term interest rate of around 12 percent per year.
Moreover, according to some experts’ forecasts, with a decreasing inflation rate and weak demand, it is possible that the depositing interest rate will soon be reduced by 1 percentage point from the current rate of 9-11 percent.
These factors will contribute to stimulating demand in the remaining months of 2012.
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