Macro/ Strategy

Manufacturing maintained YoY growth momentum but MoM growth showed the weakness

In February, the industrial production index (IIP) increased by 17.2% YoY. The accumulative 2-month IIP grew by 7.2% YoY. The strong YoY increase was attributable to the Lunar New Year holiday in February last year, which created a low comparison base for this year’s growth. Our attention was paying to the -2.2% MoM decrease in February because January had nearly 10 days off because of the long Lunar New Year.

The PMI index reflected in detail the decline in the IIP index. Despite increasing slightly from 48.9 points in January, PMI in February 2025 was still below 50, reaching 49.2 points. Vietnam’s PMI was below 50 for 3 consecutive months. Outputs and new orders continued declining due to weak demand. The slight increase in points was due to increasing purchasing activity, which reflected the positive business confidence. Companies believed that stable domestic economic conditions will support their businesses. Another factor, which was attributable to the increasing purchasing activity, was the preparation to ensure the material stock level in the current volatile business environment.

The increase in purchasing and the decrease in output followed the import-export picture. In February, import turnover increased by 8.4% YoY while export turnover decreased by 6.2% YoY. Vietnam had a trade deficit of USD 1.5bn in February. However, in 2M2025, Vietnam still had a trade surplus of USD 1.47bn.

The increase in purchases and trade deficit in February led to the demand for buying USD, which caused the USD/VND exchange rate to increase in February and March. At 20 March 2025, Vietnam dong depreciated by 0.27% YTD against the US dollar.