Vietnamese industrial output down 8.6 per cent

Feb 5, 2009, 5:28 GMT

   Hanoi - Vietnam's industrial production fell 8.6 per cent in January from the month before, media reports said Thursday, as the global economic downturn hit the country's export-dependent economy.

   The drop left industrial output 4.4 per cent lower than in January 2008, according to data from the Planning and Investment Ministry.

   Exports, which account for 70 per cent of Vietnam's gross domestic product (GDP), were down 24.2 per cent from the same month last year.

   The sharp drop in production and exports threatened to derail the government's prediction of 5 per cent GDP growth in 2009. Vietnam's economic growth already fell from 8.5 per cent in 2007 to 6.2 per cent last year.

   'The sectors that fell the furthest [in January] were exports, like textiles, garments, and shoes,' said Phan Chi Dung, head of the Trade Ministry's Industrial Consumer Product Department. 'They all decreased between 25 and 30 per cent. In the domestic market, purchasing power also decreased.'

   New foreign direct investment commitments were 185 million dollars in January, down about 90 per cent from a year earlier, according to the Planning and Industry Ministry. In 2008, Vietnam attracted more than 60 billion dollars in such commitments.

   The tourism industry contracted as well with foreign visitors in January down 12 per cent year-on-year.

   In a meeting with government leaders Wednesday, Prime Minister Nguyen Tan Dung pressed ministries and agencies to speed up projects that could boost industrial exports and domestic demand.

   Vietnam's government announced a 1-billion-dollar stimulus package late last year to raise domestic demand. Some of that money is to be used by the central bank to provide a 4-per cent-interest-rate subsidy on loans used for projects in high-priority sectors, the State Bank of Vietnam announced Wednesday.