Vietnam's industrial production on upward trend

Vietnam's industrial production index continued to rise in the first eight months of the year, with all 34 cities and provinces recording an increase.

Data released by the General Statistics Office on Saturday shows that the Industrial Production Index (IIP) in August rose by 2.2% from the previous month and 8.9% compared to the same period last year.

The IIP in Jan-August increased by 8.5% year-on-year. The processing and manufacturing industry saw a two-fold increase (It was a 9.5% growth in the same period of 2024), contributing 8.1 percentage points to the overall hike.

Notably, the eight-month IIP increased in all 34 cities and provinces year-on-year. Phu Tho province led the pack with 26.2%, followed by Ninh Binh (22.8%), Hue (18.7%), Nghe An (16.4%), and Quang Ninh (15.6%).

But some provinces had quite low IIP growth. For example, Cao Bang inched up by only 1.9%, Ha Tinh 2.9%, Lam Dong 4.1%, and Khanh Hoa 5.7%.

Ho Chi Minh City, the country's economic locomotive, had an IIP rise of 5.9% in the eight months. Hanoi's index increased by 6.5%. The duo were in the top 10 localities with the lowest IIP hike.

The recovery of production among localities was uneven. In August 2025, some localities with large industrial scale had IIP growth not as high as expected. For example, Vinh Long increased by 10.1%, Hai Phong 7.8%; HCMC 5.4%; Quang Ngai 2.4%; Quang Ninh 2.1%; and Dong Nai 1.9%. Meanwhile, Danang saw a drop of 1.7% and Bac Ninh 1.2%.

The data shows that production still had difficulties, largely due to the impacts of U.S. tariff policies and global geopolitical fluctuations that affected global demand, according to the Ministry of Finance.

According to S&P Global, production continued to increase in the Vietnamese manufacturing sector during August, the fourth consecutive month, but at a slower pace amid a subdued demand environment,

New orders decreased following a return to growth in July, contributing to a further fall in employment amid evidence of spare capacity, the company said in a release on Wednesday.

The S&P Global Vietnam Manufacturing Purchasing Managers' Index (PMI) remained above the 50.0 no change mark in August and signalled a second consecutive monthly improvement in the health of the manufacturing sector.

That said, at 50.4, the PMI was down from 52.4 in July and registered only a marginal strengthening in business conditions.

Macro-economic fundamentals "basically stable"

Reporting to the Government on Saturday, Minister of Finance Nguyen Van Thang said that in the past eight months, the macro economy was basically stable, with inflation being controlled and major balances ensured.

The consumer price index (CPI) in the eight months rose by 3.25% over the same period last year. Credit growth was high, while new lending interest rates continued to decrease. State budget revenue grew 28.5% year-on-year.

Another highlight was the completion of regulations on gold market management, officially abolishing the monopoly mechanism for gold bar production. The stock market and the corporate bond market continued to develop vigorously, according to the minister.

Disbursed FDI capital in Vietnam hit $15.4 billion in Jan-August, up 8.8% year-on-year, despite declining global investment flows. The figure was a record high for eight months in five years.

Eight-month exports reached $305.96 billion, up 14.8% year-on-year, while imports hit $291.97 billion, up 17.9%. Trade surplus was $13.99 billion.

Consumption recovered positively. The growth rate of total retail sales of goods and consumer service revenue increased gradually each month. The eight-month total increased by 9.4% year-on-year, the minister noted.

Export difficulties emerging

However, Thang stressed that one of the difficulties is that export growth is slowing down.

August saw only a 11.4% growth year-on-year. Export is forecast to continue facing many difficulties, with the number of new orders decreasing due to the impact of U.S. tax policies, high costs of imported raw materials, and issues of origin and violations of food safety regulations in agricultural exports.

According to the minister, macro-economic stability is not really solid, with potential risks. Inflationary pressure needs to be closely monitored. Exchange rate and interest rate management is under great pressure from the outside.

The Government is aiming for a GDP expansion of 8.3-8.5% this year. The target is higher than the "at least 8%" set by the National Assembly, the country's legislature, early this year.

Pham Thanh Ha, Deputy Governor of the State Bank of Vietnam (SBV), said that since the beginning of the year, foreign currency liquidity has been ensured, fully meeting the legitimate needs of the economy.

As of end-August, the USD had appreciated by about 3.4% against the Vietnamese dong (VND) compared to the end of last year, Ha told a government press meeting on Saturday.

Credit has increased by 11.8% against the end of 2024. Lending recorded positive growth compared to the previous years. In the year to end-August, outstanding credit in the whole economy reached VND17,460 trillion ($661.36 billion), up 11.8% against end-2024.

The lending interest rate level continued to decrease. By end-August, the average lending interest rate had decreased by about 0.6 percentage points/year against the end of 2024.

The SBV will continue to direct banks to continue reducing costs and enhancing digital transformation to create conditions for further reduction of lending interest rates to support businesses and people.