Index of industrial production (IIP) in the first quarter of this year surged only 4.1 per cent over the same period last year, the slowest level for the past five years, the General Statistics Office (GSO) has reported.
In last-year's economic downturn, the index still increased by 9.3 per cent during the same period. Vu Quang Ha, GSO expert, attributed the pessimistic result to the low 3.2 per cent surge in the processing-manufacturing and mining industries, which account for more than 75 per cent and 17 per cent of the country's total industrial production value, respectively. Growth among the industries during the same period last year was 12.4 per cent. Among the processing-manufacturing industry, the IIP for fertiliser, cement, engine vehicles, iron and steel decreased between 9 per cent and 19 per cent over the same period last year.
Ha said the industries faced consumption difficulties, both in domestic and export markets, causing production to shrink as a result of high inventory. The industrial sector consumption index surged only 0.5 per cent as of March 1 resulting in an inventory index of 34.9 per cent against 19.8 per cent during the same period last year.
However, production and distribution of the power, gas and water industries surged 13.7 per cent compared with 9 per cent in last year corresponding period.
The Ministry of Planning and Investment said industrial production during the first months of the year faced many challenges due to accelerating input costs, high interest rates, low consumption and high inventory.
Small and medium-sized enterprises and those in the processing and manufacturing industry were the most vulnerable, it said. Due to the economic difficulties, the ministry reported that more than 2,200 firms dissolved and another 9,700 firms registered to cease operations or did not pay tax in the first three months, a 6 per cent surge over the same period last year.
The ministry recommended the Government to intensively focus on boosting industrial production as it is a key factor to help the country maintain a GDP growth of 5-5.6 per cent this year. The industrial sector last year contributed roughly a third of the country's GDP value.
Meanwhile, experts called on the Government to cut lending rates to help ease difficulties for businesses as part of measures to accelerate the economy.