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Vietnam
Inflation eased a little in April on a month-to-month basis but the year-on-year CPI increase is still a very high 21.4 percent. Besides higher food prices, other contributors to the CPI increase were construction materials (22.6 percent) and transport (15.8 percent).
The deficit continues to widen as imports in April rose by 71 percent year-on-year while exports increased by only 27.6 percent. Imports rose to USD 8.96 billion in April from USD 7.3 billion in March. Most significantly, imported steel saw an increase in volume. Exports earned USD 5.23 billion over the last month. The four strongest export goods were crude oil, garments, shoes and seafood, together almost half of year-to-date total exports of USD 18.26 billion.
Despite the slowdown of the world economy, foreign direct investment commitments still increased by USD 2.16 billion for the month to reach USD 7.6 billion year-to-date.
The VN Index closed at 522 points at the end of April, only marginally higher than the March close of 517. On 7 April the Government slightly widened the trading band that had been imposed on stock exchanges in March (to 2 percent for the Ho Chi Minh City Stock Exchange and 3 percent for the Hanoi Stock Trading Centre; up from 1 and 2 percent, respectively). Going by the VN Index numbers, the market appears frozen. However there is still some relevant buying and selling taking place. Net foreign buying again heavily outweighed net foreign selling, with popular stocks at the end of the month including Dam Phu My (DPM), Saigon Securities (SSI) and Pha Lai Thermal (PPC).
Banks continue to face a restrictive environment due to Government policies to fight inflation. Margins are decreasing with banks borrowing short at high interest rates and lending long mostly at past lower rates. The high lending rates along with State Bank imposed credit limits and the international economic slowdown will likely affect many business plans this year.
Source: VinaCapital
United States
Employment declined by 80,000 workers in March; for the quarter, 232,000 workers lost their jobs. While the monthly declines are worsening, they still are not at the levels of the prior two recessions, when anywhere from 100,000 to 300,000 workers were let go monthly. Initially the weakness was confined to housing construction. Now, nonresidential construction employment is falling, as is retail trade, transportation/warehousing, financial activities, and the information sectors.
Retail sales, not adjusted for inflation, remained dispirited in March. Once adjusted for inflation, they likely will remain below the peak October’s pace. The home related segments of furniture, electronics/appliances, and home improvement stores all experienced weakness. Apparel-based retailers also showed declines from the previous month.
Industrial production, including utilities and mining, rose 0.3% in March, but the gain was driven by increases in mining and utilities. Production for the manufacturing sector showed no growth, following a sharp February decline. On a quarterly basis, manufacturing production has dipped 0.1% for each of the last two quarters.
One of the concerns going forward is inflation. Higher commodity prices, worldwide, are driving much of this inflation. For the last several months, prices have been rising around the globe; some countries have even initiated price controls – on food in particular. In the US, the March CPI was up an elevated 4.0% from a year ago. US import prices on consumer goods are up 2.7% from a year ago, the strongest gain in more than 15 years. Of particular concern is the 14% year-over-year jump in imported food/feed/beverages. Additionally, imported apparel prices are up 2% from year-ago levels; the strongest gains in the history of the series which goes back to 1993.
Source: Deloitte USA
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