Macro/ Strategy

Production growth continued but slower

The high double-digit growth in June and July, at 12.4% YoY and 11.1% YoY respectively, made the belief that the next expansionary production phase would come again after a challenging 2-year period (2022-2023). However, the growth rate in October slowed down. After July, the growth only reached a single digit growth in the next 3 months. The IIP growth of October was 7.0%.  Manufacturing still played an important role in the overall growth contribution. The manufacturing sector grew by 8.8% YoY in October, the highest growth compared to other sectors like mining & quarrying (-10.4% YoY); electricity & gas (+6.0% YoY); water supply; sewerage, waste management and remediation activities (+6.9% YoY).

Trading growth in October was slower than expected

In October, export and import grew by 10.1% YoY and 13.6%, reaching USD 35.6bn and USD 33.6bn, respectively. Export and import values increased by 3.4% MoM and 6.3% MoM, which were lower than expected. The October growth was expected to be higher because of the recovery after Yagi Typhoon causing disruption on manufacturing in September. In October, some companies still faced disruption because of the following storms and associated flooding after Typhoon Yagi. 

Inflation ticked up slightly

Headline inflation increased by 2.89% YoY and 0.33% MoM. Headline inflation increased by 26bps compared to September. The slight increase in MoM was attributable to the increase of food price (+0.55% MoM) due to September typhoons and the increase of the traffic (+0.66% MoM) due to the increase of the petrol price (+17.1% MoM).

Public investment accelerated

In 10M2024, the disbursed investment capital from the State budget is estimated at VND 495.9 trillion, equivalent to 64.3% of the annual plan, increasing by 1.8% YoY and 7.0% MoM. The public investment is expected to continue increasing in the last two months to meet the goal of 95% of the annual plan.

Exchange rate increased sharply during the month

Bets on Trump’s victory have caused the DXY index to increase sharply. Investors who believed in Trump trades made USD appreciate against other currencies. 

Furthermore, a number of domestic events happened in October causing the VND/USD exchange rate to increase sharply. The sharp increase in DXY and the interbank interest rates falling below 3% in October widened the USD – VND interest rate. Also in October, the domestic companies and State Treasury increased their USD buying due to the seasonal period. These events occurred simultaneously, which caused the exchange rate to increase dramatically, increasing by 2.9% within 1 month.