This remarkable performance reflected robust growth inexports of computers and electronics, andmachinery and equipment. It also reflected strongrecovery in exports of phones, textiles and garment,and footwear.

Vietnam’s Values of Merchandise Exports and Imports First 5 Months Highest Ever
Photo Credit: Reuters
Exports and imports of goods fell by 6.7 percentand 9.4 percent (m/m) in May, respectively. The decline in exports was thesteepest observed since June 2020. Yet, duringthe first five months of 2021, the values ofmerchandise exports and imports were thehighest ever recorded by Vietnam, up by 29.1 percent and 35.4 percent, respectively,compared to the same period in 2020. 
This remarkable performance reflected robust growth inexports of computers and electronics, andmachinery and equipment. It also reflected strongrecovery in exports of phones, textiles and garment,and footwear, which increased by 19.5 percent,16.1 percent and 27.0 percent (y/y), respectively, inthe first five months of 2021. This broad-basedgrowth was driven by strong demand from U.S. andChina as well as recovering demand from EU,ASEAN, Korea and Japan.
Foreign direct investment (FDI) declined for asecond consecutive month
Vietnam attracted $US 1.7 billion of FDI in May 2021, a 20 percent decline (m/m). This lower commitment might reflect seasonal factors,but also the prudence of foreign investors becauseof the ongoing outbreak. Over the first five monthsof 2021, FDI commitments reached a total of US$14 billion, comparable to the same period last year.
Inflation continued to rise due to the local transmission of higher commodity prices
The Consumer Price Index (CPI) increased by 0.3percent (m/m), mainly reflecting the impact ofrising global commodity prices on local prices. The recent increase reflects thedecision by the government to increase fuelprices at the end of April and in middle of May,causing gasoline, diesel, and kerosene prices to jump by 2.1 percent, 2.8 percent, and 5.1percent (m/m), respectively. 
Due to supplyshortage, prices of inputs for metal productionalso increased by 4.8 percent (m/m), raisingprices of housing and construction materials.Compared to the same period of 2020, CPIincreased by 2.9 percent – below the target setby the National Assembly.
Credit expanded by 1.1 percent (m/m) in May2021, down from 2.0 percent (m/m) in April.This slight deceleration may reflect the slowdown in economic activities due tomobility restrictions and social distancingmeasures. Average one-month interbankinterest rates increased from 0.9 percent inApril to 1.5 percent in May, reflecting sharperfall in deposit growth than in credit growth andpossible liquidity tensions. 
Stock market continued to perform well amid the fourth COVID-19 outbreak and its impact on realeconomic activities. VN index increased 88.66 points or 7.2 percent in May 2021, strengthening the rising trend observed sinceApril 2020.
Slower disbursement of public investment continued to reduce total expenditure
The government budget registered a surplus ofapproximately 86 trillion VND (equivalent toUS$ 3.7 billion) during the first five months of2021.
Total revenue increased by 15.2 percent compared to the same period last year, allowingthe government to reach 49.7 percent of itsannual target in only five months. Concurrently,total expenditure decreased by 3.7 percent(y/y) to 581.6 trillion VND mainly because ofthe slower execution of the public investmentprogram (down by 16.5 percent compared to the same period in 2020). 
Lower disbursementrates were observed at the central and sub-national governments, and for domestically andODA-funded projects. Shortage of inputmaterials, which resulted in higher prices, wascited by the government as one contributingfactor to the slowdown in the implementationof public investment projects.
In May, the State Treasury issued 44.2 trillionVND in bonds from the domestic market. Overthe first five months, public domesticborrowing reached a total of 109.7 trillion VND(US$4.7 billion), corresponding to 31.3 percentof the annual target for 2021. As of end May2021, the yield for 10-year maturity bonds was2.27 percent, approximately nine basis pointslower than at the end of April, reversing therising trends in borrowing cost observed sinceJanuary 2021.