Vietnam's GDP generated by construction industry declines in Q1 ...

The statistics showed that the GDP (gross domestic product) generated by the construction industry in the first quarter this year was down compared to the same period last year. The decline in GDP generated by the construction industry in Q1/2012 was attributable to many reasons in both the input and output.

Regarding the input, the most important factor is the social development investment capital. In comparison with the same period last year, investment capital if being calculated at current prices is increasing, but if excluding the price factor, it is decreasing. The ratio of investment/GDP in Q1/2012 reached 36.2 percent; lower than the same period last year (38.8 percent). This is the important factor bringing about the lower GDP growth than the same period last year (up 4 percent compared to the rise of 5.57 percent).

That also explains why the GDP generated by the construction industry in Q1 2012 decreased 3.8 percent while in Q1 last year the growth was 4.41 percent. Industrial growth of construction materials production is also greatly affected.

Coefficient between the ratio of investment capital/ GDP compared to GDP growth rate of Q1 this year was higher than that of the same period last year (nearly 9.1 times compared with nearly 7 times). Although the coefficient is often calculated and observed in a long time that is also a warning sign to improve the investment efficiency so as to help economy escape the bottom and develop. If not, inflation is very easy to repeat because the investment efficiency is a key underlying factor of inflation.

Detailing each capital source will see more clearly the picture on social development investment capital in Q1 2012. The investment capital in this sector has three sources namely state budget, loans and state-owned enterprises (SOEs).

The capital source from SOEs has been affected by two factors. Firstly, due to the low profit so re-investment is also low. Secondly, SOEs are making capital divestments from non-core investment sectors. If basing the current prices, this investment source was up slightly, but if excluding the price factor, it saw a strong decrease.

The investment capital source from the state budget reached low ratio of 19 percent of the year's plan (up 1.3 percent over the same period last year), of which, the centrally-managed budget was 18.6 percent (up 7.9 percent) and locally-managed budget was 19.1 percent (down 0.7 percent). The non-state investment capital increased over the same period last year but with not high speed when the number of newly established enterprises decreased while the volume of businesses suffering from dissolution and shutdown increased.

The FDI (foreign direct investment) capital also declined compared to the same period last year. The registered FDI capital reached $2.63 billion, down 36.4 percent, of which, newly pledged capital was $2.26 billion, down 22.8 percent on year and added FDI capital was $368 million, down 69.6 percent on year. The actualised FDI capital reached $2.52 billion, slipping slightly 0.8 percent on year, of which, in March along, the figure was over $1.5 billion, marking the very high monthly level so far. The ODA (official development assistance) capital disbursement also reached low level compared to the same period last year.

The output was also narrowed. The decline of the construction industry entailed the strong reduction in production of a variety of building materials. The inventory index of building materials manufacturing sector is increasing highly and far exceeding the common stockpile index of the whole processing industry.

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