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Maintaining industrial production, investment capital increased

In the first eight months of 2021, Hanoi’s industrial production index (IIP) increased 6.3% compared to the same period in 2020. Notable industries with significant growth in IIPs included automotive (21.6%), garment (18.2%), drinks (16.1%), wood processing and wooden products (10.9%), paper and paper products (10.5%) and electric, computer and optical products (8%). Local businesses’ utilization rates were up 0.4% compared to the same period last year.

Hanoi currently has 70 operating industrial clusters with 4,169 businesses and production facilities, attracting 62,000 workers, including 18 clusters of 1,500 medium to large businesses and trade villages attracting small businesses and production facilities at the household level. Most businesses have been complying with Covid prevention measures.

From January to August, Hanoi’s total investment from the State budget reached VND 27.5 trillion, up 3.4% compared to the same period in 2020 and accounting for 54% of the annual plan.

Producing electric products at a factory of Sunhouse Corporation. Photo: Kinh te Do thi

By the end of August, the city achieved an increase of 9.2% in total capital mobilized from credit unions compared to the end of 2020 and foreign direct investment of US$ 841.8 million, including 243 registered new projects with a total capital of US$ 157.3 million and 91 projects with added investment capital totaling US$ 486.8 million.

In addition, the consumer price index (CPI) of Hanoi in August increased 0.77% compared to the previous month. Combining the first 8 months of 2021, Hanoi’s CPI rose 1.49% compared to the same period in 2020. With the progress made, it is projected that Hanoi would support other provinces and metropolitans in Vietnam in maintaining the inflation goal for 2021.

Reduced purchasing power

Compared to the same period in 2020, 16.6 thousand new businesses were registered, down 7%. Meanwhile, there were increases in the number of dissolved businesses (2.2 thousand businesses, up 36%) and businesses filing to halt production temporarily (9.3 thousand businesses, up 19%). However, 7.4 thousand businesses resumed operation, up 72% compared to the same period last year.

Most service businesses, especially transportation businesses continued to struggle, with passenger transport down 2.3% and passenger-kilometer down 17.2%, contributing to a decrease in turnover of 10.4%. The total retail and consumption service sales reach approximately VND 349.5 trillion, down 6.3%.

Transportation businesses in Hanoi continued to struggle due to impacts from the Covid-19 pandemic. Photo: Afamily

Combining the first 8 months of 2021, Hanoi achieved a total export turnover of US$ 9,785 million, down 5.2% compared to the same period one year earlier, in which the domestic economic sector reached US$ 5,476 million, down 15.9% and the direct foreign investment sector achieved US$ 4,309 million, up 13.3%. The total import turnover was expected to reach US$ 22.5 billion, an increase of 21.8% compared to the same period in 2020. Specifically, the domestic economic sector rose 22.9% to achieve US$ 17.6 billion, while the direct foreign investment sector climbed 17.7% to reach US$ 4.9 billion.

Economic prospect for 2021

Predicting the challenges in the last leg of 2021, the People’s Committee of Hanoi has developed two scenarios for the last 6 months to achieve the goals set for 2021.

In the first scenario, Hanoi is projected to observe a growth of 8.59% in the third quarter and 9.12% in the fourth quarter to achieve annual growth of 7.5%.

In the second scenario, Hanoi would only manage to control Covid in the third quarter due to complicated Covid occurrences, affecting the service sectors negatively. As a result, Hanoi’s gross regional domestic product is projected to achieve 6.5 – 7%.

As Vietnam’s 2021 gross domestic product might be down 2% compared to the projection in December 2020 to reach an increase of just 4.8%, per the World Bank’s prediction stated in its August report “Digital Vietnam – the path to tomorrow,” Hanoi’s scenarios have shown the city’s responsibilities in contributing to economic growth at the national level in 2021. In both scenarios, Hanoi would focus on developing major transportation projects and planned industrial clusters while maintaining strict Covid prevention measures.

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