Vietnam’s industrial production continued to expand in the second quarter of 2025, with the Industrial Production Index (IIP) rising by 10.3 per cent year-on-year, including a 12.3 per cent increase in the processing and manufacturing sector, according to the National Statistics Office (NSO) under the Ministry of Finance.

For the first half of 2025, the IIP rose by 9.2 per cent compared to the same period last year, marking the strongest first-half performance since 2020.

Significant growth was recorded across several key industries in the first six months, including motor vehicle manufacturing (up 31.5 per cent), leather and related products (17.1 per cent), rubber and plastics (17 per cent), garment production (15.1 per cent), other transport equipment (14.1 per cent), and non-metallic mineral products (13.7 per cent).

By contrast, some sectors showed minimal growth or contraction, with beverage production up just 1.9 per cent, electrical equipment manufacturing rising 1.1 per cent, and crude oil and natural gas extraction falling by 8.2 per cent.

In terms of regional performance, 62 provinces and cities posted IIP growth in the first half of the year. However, the former Ba Ria, Vung Tau Province, now incorporated into Ho Chi Minh City, recorded a 2.6 per cent decline.

Provinces with strong growth benefited from robust activity in processing and manufacturing, as well as in electricity production and distribution. Localities with slow or negative growth typically saw stagnation in these same sectors.

The NSO attributed improved performance to the implementation of the two-tier local government model, which has streamlined administrative processes and given businesses greater autonomy in production planning.

Crackdowns on counterfeit goods have encouraged higher output across industries. Accelerated disbursement of public investment and increased foreign direct investment (FDI) in real estate have also boosted construction-related industries such as cement, concrete, and steel.

Export-oriented sectors like electronics, textiles and garments, and footwear maintained competitive advantages, partly thanks to a framework agreement with the United States that provides lower export tariffs compared to other countries. FDI continued to pour into the processing and manufacturing sectors, particularly in electronics and computer components, which remain key drivers of growth through the remainder of 2025.

Despite overall growth, the NSO noted signs of slowing momentum in some industries. For example, wood processing and wood products increased by 16.2 per cent in the first quarter but only 5.8 per cent in the second. Similarly, the production of furniture such as beds, wardrobes, and tables grew 12.6 per cent in Q1 and 10.9 per cent in Q2.

Inventory levels in the processing and manufacturing sector averaged 85.7 per cent in the first half of 2025, up from 76.9 per cent a year earlier.

The NSO expects industrial production to maintain positive momentum in the second half of the year, driven by FDI, green technology adoption, and large-scale public investment. However, it warned that sustaining high growth will require businesses to remain agile, diversify supply chains, and respond proactively to global challenges.