Vietnam CPI up 3.37% in January; tourist arrivals on the rise ahead of Tet holiday
Jamille Tran
[HO CHI MINH CITY] Vietnam’s consumer price index (CPI) in January rose 3.37 per cent year on year, according to data released by the government’s statistics body on Monday (Jan 29).
The index grew by 0.31 per cent from December’s level, growth which the General Statistics Office (GSO) attributed largely to rising prices of healthcare services, electricity and rice.
The sharpest increase was in prices of medicine and healthcare services, followed by housing and construction materials, and transportation services. The two groups that saw a fall in prices were postal and telecommunications, and education.
The GSO said that core inflation – which strips out the costs of food, fuel, healthcare and education services – stood at 2.72 per cent in January, from 2.98 per cent a month ago. Vietnam’s legislature has said that it wants to keep inflation under control this year, at between 4 and 4.5 per cent.
Exports for January grew by 42 per cent year on year to US$33.57 billion. It expanded by 6.7 per cent on a month-on-month basis.
Imports rose 4.2 per cent from December and 33 per cent from a year earlier to US$30.65 billion, which resulted in Vietnam having a trade surplus of US$2.92 billion.
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Industrial production in January declined about 4.4 per cent month on month, but gained 18.3 per cent from a year ago, largely due to a rise in manufacturing output.
As at Jan 20, registered foreign direct capital in Vietnam grew 40.2 per cent from the year-ago period, estimated at US$2.36 billion. Disbursed foreign direct investment (FDI) was recorded at US$1.48 billion, up 9.6 per cent from last year.
For the whole of 2023, registered capital rose 32.1 per cent to US$36.6 billion; disbursed capital hit a record high of US$23.2 billion.
In a Jan 21 note, S&P Global said that low costs, favourable demographics and improving human capital will enable the growth of FDI to continue “for at least a few more years”.
“As more foreign investors set up in Vietnam, onshore production networks and scale effects make it even more attractive to prospective newcomers,” it added.
Vietnam’s economy grew by a lower-than-expected 5.05 per cent in 2023. The legislature has a growth target of 6 to 6.5 per cent for 2024.
S&P Global has predicted that the economy would grow by 6.3 per cent this year; Standard Chartered has a more optimistic forecast of 6.7 per cent. Maybank’s forecast is for a 5.8 per cent expansion.
Optimism ahead of Tet
Vietnam’s consumer sectors continue to enjoy tailwinds from the ongoing tourism recovery and spending on goods ahead of the Tet holiday – the country’s biggest festival to celebrate the Lunar New Year with a seven-day holiday from Feb 8 to 14.
The GSO noted that retail sales in January climbed 8.1 per cent year on year, and was up 1.6 per cent from the month before.
As for tourism, Vietnam welcomed 1.5 million foreign visitors in January, up 10.3 per cent from December and 73.6 per cent from the year before. The latest number was about 76 per cent of the arrivals in January 2020 – just before the Covid-19 pandemic hit – with the bulk of the visitors coming from South Korea, China and Europe.
Analysts attributed the increase to Vietnam’s extension of visa-free stays from 15 to 45 days for tourists from these nations, excluding China, from last August. Vietnam is also considering visa-free exemptions for China and India to further develop its tourism sector.
The Vietnamese government has set a target of 17 to 18 million international visitors this year, building on the 12.6 million arrivals in 2023, which was about 70 per cent of pre-pandemic levels.
In a Jan 19 report, Maybank economists noted that the tourism recovery in South-east Asia lost steam during the latter part of 2023, as China’s “revenge travel” after its reopening was shorter and less significant than expected.
“The non-China markets will help cushion the sluggish tourist rebound from China, but it cannot fully offset it,” they said, adding that Vietnam’s aim of having 18 million arrivals may be “too optimistic”.
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