Slow recovery puts dent in export figures

Feeble global demands for consumption are expected to continue, making it hard for Vietnam to boost exports this year.

The National Assembly Economic Committee reported that in Q2, the country’s trade landscape will not improve due to continued shortages of export orders. “And if there are orders, they are of small scale with a limited number and low in value,” it added, saying the situation may last until the end of Q3.

The government earlier set a target that this year, Vietnam’s total goods export-import value will be about $795 billion, up about 8 per cent against this year. In which, the export turnover will be $398 billion, up over 8 per cent on-year. The trade surplus will stay at about $1 billion, far lower than the $11.2 billion recorded last year.

However, the government last week reported that since early this year, Vietnam’s key and traditional export markets have been narrowing, and many exporters in the country have been suffering from serious shortages of export orders. This has made it difficult for achieving the export goal for 2023.

Latest figures from the General Department of Vietnam Customs showed that the country’s total export-import turnover in the first four months of this year is estimated to reach about $206.76 billion, down by $37.47 billion or 15.3 per cent on-year. In which the export value sat at $107.16 billion – down by $16.08 billion or 13 per cent, and the import value stood at $99.6 billion – down 17.7 per cent on-year or $21.38 billion.

The economy saw a high trade surplus of $7.56 billion, but Vietnamese businesses witnessed a big trade deficit of $6.62 billion.

State-owned Vinatex reported that this is the second consecutive quarter that the Vietnamese garment and textile industry suffered from an on-year reduction since Q4 of 2022.

“Exports to the US declined by more than 30 per cent with a total value of about $1.5 billion, meaning an on-year drop of $500 million each month in Q1 of 2023,” Vinatex reported. “It is expected that Vietnam’s garment and textile export orders in Q2 and Q3 will continue facing difficulties, with an expected reduction of 25-30 per cent as compared to the same periods last year.”

The Vietnamese government’s report to the National Assembly (NA) also noted that Vietnam’s imports of crucial production materials in the first four months of this year are estimated to reduce by 15.7 per cent on-year. In which, FIEs’ saw an on-year drop of 15.1 per cent.

“This is due to a slash in export orders caused by economic difficulties in the world economy and the tightened monetary policy in Vietnam’s export markets where consumers have been forced to cut down on their unnecessary expenditures,” the government reported.

The National Assembly Economic Committee’s Chairman Vu Hong Thanh noted, “With existing difficulties in the world economy and a reduction in Vietnam’s import of production materials and in FIEs’ imports, the country’s export-import outlook in the coming months will face massive difficulties, meaning negative impacts on the entire economy’s growth.”

What is more, a reduction in Vietnam’s index for industrial production (IIP) has also had negative impacts on the country’s export-import landscape.

According to the General Statistics Office (GSO), Vietnam’s index for industrial production (IIP) in April increased 0.5 per cent as compared to the same period last year, when the IIP rose 10.7 per cent on-year. However, poor performance of many enterprises has caused an on-year 1.8 per cent drop in the first four months of this year. In the corresponding period last year, the rate expanded 7.8 per cent on-year.

“This is largely due to the world economy’s slow recovery and tightened monetary policy, leading to a slash in consumption demands of Vietnam’s key trade partners. This has resulted in a reduction in orders and export turnover,” the GSO stressed.

Vietnam Investment Review