Global demand geared up to rise

August 12, 2021 | 07:00
Despite massive challenges, Vietnam’s trade landscape is slowly gaining momentum thanks to a bit-by-bit recovery in local production and gradual reopening of many foreign markets, promising a brighter export-import picture for the country until the year’s end.
Global demand geared up to rise
FIEs have enjoyed a trade surplus of $15.1 billion in 2021 so far, to the end of July. Photo: Le Toan

A fortnight ago Nguyen Duc Hung, director of locally-owned electronics producer Duc Hung JSC based in the northern province of Vinh Phuc, held online meetings with four partners from South Korea and Japan to negotiate new export orders. His company will supply them with electronics items, with a total value of nearly $10 million for the fourth quarter of this year.

“We earned an export turnover of about $11 million in the first seven months of 2021, up from $10 billion in the corresponding period last year,” Hung said. “Our exports were boosted during the first quarter. However, since April the exports have slowed down due to COVID-19. But we expect that with new orders we will be able to increase shipments thanks to South Korea and Japan gradually reopening their markets to import activities.”

In the last four years, the firm has been centring on manufacturing and exporting LED products, besides its traditional items like lighting equipment and electric lights for motorbikes.

The company has also imported electronic items from foreign markets for its production. The import turnover since early this year has climbed about 5 per cent on-year. “It is expected that if COVID-19 is brought under control in the foreign markets in the third or fourth quarter, the firm’s export and import turnover will ascend 5 and 6 per cent in 2021, respectively,” Hung said.

Hung’s company has contributed to an expansion in the electronics industry’s performance in the first seven months of 2021, when the industry’s export-import turnover hit $27.4 billion and $39.4 billion, up 16.5 and 20.3 per cent on-year, respectively.

South Korea’s Samsung holds more than 90 per cent of Vietnam’s total electronics export turnover in the period.

The Ministry of Industry and Trade (MoIT) reported that while many items witnessed a slash in export-import turnover in the first seven months, electronics is among several key export items with an on-year rise in export turnover in the period, such as rubber ($1.5 billion, up 73.6 per cent), machinery and equipment ($19.7 billion, 55.4 per cent), textiles and garments ($18.6 billion, 14.1 per cent), footwear ($12.1 billion, 27.7 per cent), wood and wooden products ($9.5 billion, 53.7 per cent), and transport means and components ($6.5 billion, 48.5 per cent).

In the first seven months of this year, Vietnam’s total export turnover hit $185.33 billion, up 25.5 per cent on-year, with local businesses raking in $48.52 billion – up 14.6 per cent on-year and accounting for 26.2 per cent of the country’s total export turnover; and foreign-invested enterprises (FIEs) fetching $136.81 billion including crude oil exports, up 29.9 per cent on-year, and holding 73.8 per cent of total export revenue.

Meanwhile, the total import turnover sat at over $188 billion, an on-year expansion of 35.3 per cent, with domestic enterprises earning $66.31 billion, up 29.8 per cent as compared to the same period last year, and FIEs harvesting $121.72 billion, an on-year rise of 38.5 per cent.

Thus in the first seven months of this year, Vietnam saw a trade deficit of $2.7 billion, in which local enterprises witnessed a shortfall of $17.8 billion while FIEs enjoyed a trade surplus of $15.1 billion, including crude oil exports.

“In general, Vietnam’s seven-month export picture remains optimistic. However, the export growth is showing a signal of slowdown due to COVID-19 hurting performance of enterprises,” said an MoIT report released last week. “It is expected that in the coming time, growth of exports and imports will largely depend on how Vietnam can well control the pandemic and boost vaccination.”

The MoIT forecasted that the world’s demands for goods will continue staying at a high level because many nations are increasing their vaccinations drives and reopening their markets, which “will raise their demands for textiles and garments, footwear, wooden products, and electronics items from Vietnam.”

Moreover, many economies have also been expanding stimulus packages via direct support for their citizens, accordingly boosting consumption of goods including those imported from Vietnam.

The International Monetary Fund late last month estimated that the global economic growth rate will be 6 per cent this year. Meanwhile, according to the World Bank’s latest report on the global economic outlook released in June, the world’s economy will climb 5.6 per cent in 2021, instead of the previous forecast of 4.1 per cent made in January. The reason is that many nations have been increasing their vaccine programmes and stimulus packages.

In addition, the MoIT also said that Vietnam and its partner nations are actively implementing commitments under inked free trade agreements, which will help boost Vietnam’s exports into these nations with preferential tariffs.

The MoIT forecast that this year, the total export turnover will be $308 billion, up 9 per cent on-year, and the total import turnover will be $306 billion, up 16.5 per cent on-year, meaning a trade surplus of about $2 billion.

By Thanh Thu

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