AsemconnectVietnam - Ho Chi Minh City, Vietnam's southern economic hub, recorded a year-on-year growth of 0.7 percent in the first quarter as persistent global uncertainties and high interest rates led to a contraction in manufacturing sectors, underscoring challenges facing the Southeast Asian country's biggest city in the year ahead, Vietnam News reported on Wednesday.

Ho Chi Minh City's gross regional domestic product in the first quarter is the lowest among five centrally-run cities, Secretary of the municipal Party Committee Nguyen Van Nen said, referring to the economic expansion of northern port city Hai Phong at 9.65 percent, central city Da Nang at 7.12 percent, capital city Hanoi at 5.8 percent and the southern Mekong Delta's largest city of Can Tho at 4.02 percent.
The southern business hub's slow growth is broadly in line with expectations of a gloomy global outlook due to high inflation, financial turmoil, and spillover from the geopolitical conflict, said the city's statistics office.
The city saw a negative growth of 3.6 percent in the sector of manufacturing and construction, while services rose 2.07 percent and agriculture gained 2.06 percent from a year earlier, official data showed.
There was a significant deceleration in nearly half of the most critical service industries of Ho Chi Minh City, including real estate activity down 16.2 percent, transportation and warehousing business set back 0.63 percent, and health care services down 4.82 percent.
High interest rates coupled with a slowdown in overall demand pose a further downside risk to manufacturing activity.
The city's industrial output in the first quarter fell 0.9 percent from a year ago with processing and manufacturing companies posting a year-on-year increase of 4 percent in their inventories.
The palpable weakness in household consumption continued its three-month streak of decline in March, which led to a modest growth of 9.1 percent in the first quarter from a year before.
Foreign direct investment inflows rose 22.4 percent as of March 20 to 497.5 million U.S. dollars year on year, data showed.
A surge of public spending, combined with the disbursement of foreign direct investment, will be the key driver for economic recovery and growth of Ho Chi Minh City, economist Vo Tri Thanh told local media.
Labor market remains solid
Vietnam's labor market remained resilient in the first quarter, shrugging off mounting worries of a global slowdown, the Vietnam News reported on Friday.
Job growth continued with 1.1 million jobs added in the first three months to 51.1 million, which translates into a year-on-year rise of 2.2 percent, said the country's General Statistics Office (GSO).
Meanwhile, details of the statistics office's closely-watched employment report were also positive, with the unemployment rate falling to 2.25 percent from 2.46 percent a year ago. The country recorded a total of 1.05 million unemployed in the period, down 5.8 percent from a year ago and down 1.2 percent from the last quarter of 2022, official data showed.
The labor force participation for prime-age workers above 15 years old increased to 52.2 million people from around 51 million last year, said the statistics office, noting that the unemployment among working-age Vietnamese sharply dropped 33 percent to 885,500 people in the period.
The gains in employment in the first quarter were led by the service sector, which accounted for 39 percent of job gains over the last three months, followed by the industrial manufacturing and construction sector, and the agriculture, forestry and fishery sector.
With the labor market remaining strong, average monthly earnings increased 10 percent to 7 million Vietnamese dong (around 300 U.S. dollars) from a year earlier, Pham Hoai Nam, head of the GSO's population and labor statistics department, said at a press conference.
The earnings difference between women and men continued as working women were still paid less than working men. In the first quarter, women earned an average of nearly 74 percent of what men earned, according to the GSO's analysis of median monthly earnings.
The latest data also revealed the income gap between urban and rural employment as urban earnings exceed rural earnings by 2.5 million dong (106 dollars).
"The labor market continued to maintain its recovery momentum in the first quarter of 2023 with extended improvements in labor force participation and job growth," said Nguyen Trung Tuyen, deputy head of the statistics office.
Garment industry suffers as retailers cut orders
Vietnamese garment makers felt the impact of a global slowdown dampening demand in their key markets as the industry's exports dropped 17.4 percent to 7.2 billion U.S. dollars in the first quarter from a year earlier, according to the country's General Statistics Office.
Textiles and garments, Vietnam's second-largest export earner after smartphones and electronics, have been hit as consumers in the U.S., Europe and other big markets cut spending on clothing, said Cao Huu Hieu, chief executive of the country's top textile and garment maker Vinatex.
Vietnamese manufacturers are faced with a sharp decline in orders as global demand has shrunk by over 60 percent, resulting in a contraction of up to more than 63 billion U.S. dollars in the global textile market, Hieu added.
Local companies had to cut about 20 percent of their production and many had been forced to reduce their workforce, said Nguyen Huu Tuan, a senior executive of listed Thanh Cong Group.
Other firms also reported a drop of more than 20 percent in both order quantity and value, Pham Xuan Hong, chairman of the Ho Chi Minh City Textile and Garment - Embroidery Association, told local media.
The hit to the textile and garment industry puts further pressure on Vietnam's economy in the first quarter which grew at the second-lowest rate since 2011.
Vietnam saw 44 billion U.S. dollars of apparel exports last year, falling short of its targeted 47 billion U.S. dollars, government data showed.
Despite all challenges, textile and garment businesses are looking to the second half of the year with optimism as inflation pressure on major export markets like the U.S. and Europe would ease, combined with benefits from new-generation free trade agreements, which could lead to the growth of the demand side.
The textile and apparel association expects exports to reach above 45 billion U.S. dollars this year.
Crude oil imports up 55% y/y, coal up 35%
Vietnam's crude oil and coal imports in the first quarter rose sharply, official customs data showed on Monday, despite a slowdown in its economic growth.
Crude oil imports in the first quarter of 2023 rose 55% from a year earlier to 2.7 million tonnes, while coal imports rose 35% to 8.6 million tonnes, the Customs Department said in a report.
Nguyen Thanh Son, a Hanoi-based energy expert, said importers might have taken advantage of lower import prices to increase their stocks.
"The strong rise in crude oil and coal imports in the first quarter doesn't necessarily mean domestic demand for fuel is strong," Son said.
The crude oil import value in the first quarter rose 46.4% from a year earlier to $1.7 billion, while the coal import value rose by only 0.9% to $1.5 billion, the customs report showed.
Vietnam's domestic crude oil and coal output in the first quarter stayed flat from the same period last year, at 2.1 million tonnes and 11.6 million tonnes, respectively.
Economic growth slowed to 3.32% in the first quarter, against a 5.92% year-on-year expansion in the fourth quarter of 2022, as exports were hit by weakening global demand.
The Southeast Asian country's overall demand for crude oil is forecast to be lower this year as both of its oil refineries are scheduled to undergo a lengthy shutdown for maintenance in the second half of 2023.
Exports down 11.8% y/y at $79.3 billion
Vietnam's exports in the first quarter fell 11.8% from a year earlier to $79.3 billion, government's customs data released on Monday showed.
Imports in the January-March period fell 15.4% to $74.5 billion, resulting in a trade surplus of $4.8 billion, the Customs Department said in a report.
In March, exports rose 14% from February to $29.7 billion, wile imports were up 21.8% at $28.3 billion, the department said.
March rice exports at 961,608 T, up 80% m/m
Vietnam's rice exports in March rose 79.9% from the previous month to 961,608 tonnes, government customs data showed on Monday.
Rice shipments from Vietnam were valued at $509 million in the month, up 78% against February, it said.
March coffee exports up 5.2% m/m at 210,372 T
Vietnam's coffee exports in March stood at 210,372 tonnes, up 5.2% from the month before, government customs data showed on Monday.
Coffee export revenue for the month reached $482 million, up 10.9% against February, Vietnam Customs said in a statement.
T.Huong
Source: Vitic/Reuters