Vietnamese manufacturing business sentiment is set to rise in the third quarter on the back of the country’s unexpectedly higher economic growth in the second quarter and an optimistic outlook for the year.

A survey by the General Statistics Office (GSO) on production and business trends in the manufacturing, processing and construction industries for Q2 and forecast for Q3 released last week revealed that 82.9% of businesses expect improved/stable business activities in the third quarter compared to the second quarter. In comparison, 17.1% foresee greater difficulties.

This marked an improvement compared to the previous survey, where 77.6% of businesses forecast more favourable or stable production and business activities and 27.1% predict greater difficulties.

However, optimism varies across different types of enterprises.

State-owned enterprises (SOEs) lead with 43% predicting better conditions, followed by foreign direct investment (FDI) enterprises at 42.6%, while only 39.6% of private domestic enterprises forecast an improvement. In contrast, 17.3% of domestic firms anticipate tougher times, compared to 16.4% of State-owned and 16.8% of FDI enterprises.

This survey was conducted among 6,114 manufacturing and processing enterprises.

In the second quarter, the two major challenges for the manufacturing and processing industry are "low domestic market demand" and "high competition from domestic products", with 53.4% and 50.4% of enterprises identifying these issues, respectively.

Consequently, 28.9% of businesses have urged the Government to implement more effective measures to stimulate domestic demand and promote the "Vietnamese use Vietnamese goods" campaign. Additionally, 26.1% of businesses requested that the Government and local authorities intensify trade promotion efforts to explore new markets and partners, thereby increasing product consumption both domestically and internationally.

Interest rates remain a significant challenge, with 22.3% of businesses struggling due to high loan interest rates, up 3.9 percentage points from Q1 2024. To alleviate the pressure of rising input costs, 50.1% of businesses have called for the Government to lower lending rates, while 28.2% suggested banks simplify loan procedures and conditions.

Textile and footwear enterprises face unique challenges, reporting difficulties concerning export orders and the skilled labour force. Consequently, 18.6% of businesses have called for Government support in training and upgrading the skills of workers to meet production requirements.

Additionally, 24.5% of businesses have urged improvements in logistics services; 23.4% have requested reductions in land rental costs for production and business activities; and 22.4% have emphasised the need for a stable power supply.

Regarding administrative procedures, 31.5% of businesses have called for continued reforms to reduce waiting times and streamline administrative processes.

Vietnam's economy expanded by 6.93% during the second quarter and 6.42% in the first half.

According to Nguyen Thi Mai Hanh, Director of the GSO's National Accounts Department, Vietnam's economy in the second half of the year requires steadfast commitment, coordinated fiscal and monetary policies, along with stimulus measures for investment and consumption and innovating growth drivers for breakthroughs to achieving the yearly-target of 6.5% growth./.