Positive signs of recovery ahead for national economy

According to a report released by the General Statistics Office, the first five months of the year has seen the index of industrial production increase by 1%, the lowest increase recorded in several years. The complicated developments relating to the pandemic has caused disruptions in the supply chain of raw materials for production, thereby having a serious negative effect on industrial production.

Despite this, the manufacturing sector enjoyed a surge of 11.2% in May from the previous month, while the number of employees working in industrial enterprises also grew by close to 1%. This boost coincided with increased return growth occurring within the corporate sector.

Indeed, as many as 10,700 businesses were established nationwide over the past month, an increase of 36% compared to the figures from April.

The number of enterprises returning to operation also increased following the conclusion of the social distancing period, with May seeing the number of enterprises resuming operations increasing by close to 33% in a month. Meanwhile, the number of enterprises registering to halt their business for a period of time fell by nearly 20%.

The Manufacturing Purchasing Managers' Index (PMI) rose by ten points throughout May, reaching a total of 42.7 points compared to the record low of 32.7 that was recorded in April. Despite the fact that the figure has yet to return to above 50 points, the PMI ultimately signals expansion or contraction, which also indicates if the manufacturing sector is declining or growing.

Moreover, the return to daily activities is also reflected through retail sales of goods and services with trade and service activities during May increasing by roughly 27% compared to the figures seen in April. Of which, retail sales of goods soared by a total of 17%, whilst revenue from accommodation and catering services also enjoyed an increase of nearly 96%.

A number of other indicators also signify positive features, these include investment capital from the State budget which marked the fastest increase from the previous five years, while the transportation sector registered double digit growth.

IHS Markit, a London-based global information provider, believe that despite the country’s PMI in May being higher, indicating that business conditions declined slightly, the new data reveals that the health of the manufacturing sector remains at a low level.

However, the nation’s success in bringing the COVID-19 pandemic under control will serve to allow the economy to begin to make a full recovery. Although the PMI data for May shows that there is still a long way to go.

According to Andrew Harker, economics director at IHS Markit, the return to growth may be a gradual process with little support from overseas markets, at least in the near future, with the pandemic continuing to affect many regions globally.

If services, industrial production, and retail can be considered positive signs, then import and export continues to show difficulties. The total import and export turnover during the reviewed period stood at an estimated US$197 billion, a fall of 2.8%, while the trade balance of goods reached a trade surplus of US$1.9 billion.

“The COVID-19 pandemic continues to see increasingly complicated developments in markets which are major trading partners of our country, causing negative impacts on export and import activities," the General Statistics Office said.

Despite many drastic measures being taking in terms of management, the average consumer price index for the opening five months of the year compared to last year remained at their highest level in the past three years with a rise of 4.39%. Meanwhile, food and catering services enjoyed an increase of nearly 11%, of which foodstuff rose by roughly 14% due to an increase occurring in the price of pork.