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Friday, July 19, 2024

Export sector is bright spot for Vietnam economy

By Dung Nguyen

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HCMC – New statistics show that Vietnam’s exports in April expanded a staggering 25% year-on-year at US$33.26 billion while imports reached US$32.19 billion, up 15.5%.

In the first 4 months of the year, Vietnam had a trade surplus of US$2.53 billion.

A Maybank Investment Securities (MIB) report said almost all sectors registered positive export growth, with crude oil advancing 204% against March in which it fell 6%, iron and steel rising 23.6%, textiles and garment surging 25.4%, computers, electronics and components edging up 23.2% and phones and components picking up 62.8%.

Supply chain disruptions caused by the military conflict between Russia and Ukraine and China’s strict Covid lockdowns did not affect Vietnam’s export performance. This was possibly because companies exported their inventories to meet the demand of recovery, MIB’s report said.

Statistics from Mirae Asset Securities showed that April exports increased significantly in main markets of Vietnam, including the U.S., the EU, China, South Korea and Japan.

Growth was driven by businesses resuming operations, factories reopening and capacity returning to normal. Increasing demands of international markets and Vietnam’s better participation in global supply chains through key trade agreements are others, according to Mirae Asset.

The Regional Comprehensive Economic Partnership (RCEP), which has been in effect since early 2022, is expected to fuel the country’s export growth in the near future. According to a report published at the end of April by Standard Chartered, the sectors expected to benefit from RCEP include information technology, textiles, footwear, agriculture, automotive and telecommunication.

“RCEP will help Vietnam boost exports and access to major consumer markets such as China, Japan, South Korea and Indonesia. This agreement will help manufacturers in Vietnam reduce costs and access supply chains throughout the Asia Pacific region. Most of the raw materials for Vietnam’s exports are imported from RCEP members,” said Tim Leelahaphan, economist in charge of Thailand and Vietnam, from Standard Chartered.

Despite many positive factors, exporters in Vietnam will also face challenges. First of all, with RCEP, Vietnam will also face fiercer competition, domestic and export alike, according to Standard Chartered.

Export growth will also lead to imports rising, mainly caused by higher global prices, which put pressure on inflation. In fact, in April, imports also increased sharply over the same period last year. The trade surplus in April was just over US$$1 billion, much lower than the US$2 billion in March.

In 2021, Vietnam had a trade deficit given global supply chain congestion and production stagnation. However, at the end of the year, Vietnam recorded a high trade surplus.

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