However, prospects remain fragile as Vietnam’s PMI remained in contractionary territory in October (49.6), as it was in September (49.7). The monthly growth of retail sales remained flat of -0.01 % in October, compared with 0.55 % growth in September. 

Exports and imports of goods continued to recover, increasing by 1.6% and 1.05% respectively, as demand from trade partners continued to gradually recover. However, both exports and imports of the first 10 months remained in contractionary territory, decreasing by 6.9% (on-year) and 12.4% (on-year) respectively.

The Consumer Price Index (CPI) inflation registered 3.6 % on-year in October, driven by transport costs, while core inflation fell from 3.8 % on-year in September to 3.4 % on-year in October, below the 2023 policy rate of 4.5 % set by the authorities.

Credit growth remained sluggish, registering -0.1 % (m/m) and 9.3 % (on-year) in October 2023, well below the pre-COVID period and reflecting persistent weak private investment.

The economic slowdown continued to weigh on the government budget. Despite a surge in revenue collection in October, revenue collection during the first 10 months of 2023 was 4.5 % lower than the same period of the last year.

At the same time, public expenditure accelerated by 11.4 % during the same period (on-year) reflecting the government’s effort to support the slowing economy.

Public investment disbursement increased by 35 % (on-year) for the 10-month period, helping the government achieve 55 % of the annual planned budget (compared with 46.5 % during the same period of 2022).

This execution rate, however, is still low given that there are only two remaining months for disbursing 2023 budget.