Upcoming few months critical for trade flows

July 13, 2022 | 09:00
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With efforts to weather the global storm, Vietnam’s export-import landscape is regaining momentum on the back of a rebound in domestic production and growing demand from many foreign markets. However, looming risks remain, affecting the trade outlook for the entire economy.
Upcoming few months critical for trade flows
Upcoming few months critical for trade flows, illustration photo

Since early this year, Vietnam-Taiwan joint venture Tam Viet Garment Co., Ltd. in Hanoi has seen a 13 per cent rise in export orders from Europe, which accounted for about 50 per cent of its export value in 2021, but only 30 per cent in the first six months of this year. “We have expanded our export markets to Japan and South Korea, besides European nations. We are now negotiating more export deals for Q3,” said Tam Viet’s vice director Nguyen Hoang Huong. “In the last few months, we have recruited more workers to fulfil the contracts on time.”

According to Truong Van Cam, vice chairman of the Vietnam Textile and Apparel Association (VITAS), the country’s textile and garment industry has reaped positive export results in the first half of 2022, with an export turnover of $22.3 billion, up 17.7 per cent on-year – including $17 billion worth of apparel exports, up19.5 per cent. The industry also used $13.4 billion on imports, up 11 per cent on-year.

“The industry has earned a trade surplus of $8.9 billion, while that of the whole economy in the first six months is only $710 million. Garments and textiles have become one of the biggest money makers of the country since early this year,” Cam said, adding, “The industry has set an export turnover goal of $43-45 billion for 2022. However, over 50 per cent of this target has been reached and more efforts will be made to materialise this target.”

Meanwhile, the leather, footwear, and handbag industry has also reaped big export results in the first six months. Phan Thi Thanh Xuan, vice chairwoman of the Vietnam Leather, Footwear and Handbag Association (Lefaso), said that the industry’s total export turnover reached $12 billion, up 13 per cent on-year.

“Exports of businesses producing bags have increased 20 per cent, which is very high, meaning that hundreds of thousands of people have secured stable employment,” Xuan said. “Exporters have expanded their markets to nations sharing free trade agreements with Vietnam. The industry has set a target of hitting $20 billion in exports this year.”

According to the Ministry of Agriculture and Rural Development, total 6-month agro-forestry-fishery export turnover is nearly $27.9 billion, up 13.9 per cent. Of which agricultural products earned $11.37 billion – up 8.8 per cent, forestry products $9.1 billion – up 3 per cent, aquatic products $5.8 billion – up 40.8 billion, and other products $1.6 billion.


The General Statistics Office (GSO) reported that in the first six months of 2022, garments and textiles, footwear and bags, and agro-forestry-fishery are among 28 categories of exports raking in an export turnover of over $1 billion, and among five categories of exports with an export value of over $10 billion. Export-import activities have taken place vividly, with enterprises increasing their exports thanks to foreign markets’ growing demands, and expanding imports to serve their domestic production.

The economy’s total export turnover hit $32.65 billion in June, up 5.6 per cent on-month; $96.8 billion in Q2 – up 21 per cent on-year and 8.7 per cent against Q1. The 6-month figure is estimated to be $185.94 billion – up 17.3 per cent on-year, in which Vietnamese companies raked in $49.26 billion – up 20 per cent, while foreign businesses fetched $136.68 billion (including crude oil exports) – up 16.63 per cent.

“The increased level in export turnover of domestic enterprises is higher than that of foreign companies. This means great efforts by domestic businesses in business and production recovery and resumption of supply chains,” said GSO general director Nguyen Thi Huong.

Meanwhile, Vietnam’s total import value sat at $32.37 billion in June, down 0.8 per cent on-month; $97.6 billion in Q2, up 15.7 per cent on-year and 11.3 per cent over Q1.

The 6-month figure is estimated to be $185.23 billion – an on-year 15.5 per cent climb, in which $65.23 billion is for Vietnamese companies – up 15.2 per cent, and $120 billion is for foreign businesses (including crude oil exports) – up 15.6 per cent.

The nation’s trade surplus of goods is estimated to be $710 million in the first six months, when there is also a trade deficit of $8 billion in services – including exports of $4.3 billion and imports of $12.3 billion.

Under the results of the GSO’s Q2 survey on nearly 5,650 manufacturing and processing enterprises, 76.5 per cent of respondents said their number of new export orders for Q2 has “increased” or is “unchanged” as compared to that in Q1 – in which the apparel sector has the biggest rate of 43 per cent of firms with orders in Q2 higher than in Q1.

Meanwhile, the rate of firms with a reduction in new export orders is 23.5 per cent, with the furniture sector having the biggest reduction in orders – at 32.1 per cent.

The GSO also reported that 85.5 per cent of respondents expected their new export orders in Q3 would “increase” or remain “unchanged” as compared to Q2. Only 14.5 per cent of surveyed enterprises forecast a reduction in such orders.

Looming risks

Huong of Tam Viet Garments said she is expecting a double-digit export turnover for the company for the whole of 2022. “However, we are worrying about a fall of our export orders in Europe.

Many partners have stopped orders with us due to their production shrinking. In fact, the export turnover from Europe has fallen from 50 per cent last year to 30 per cent in the first six months of this year. The rate may continue to fall in the coming months as Europe’s economy is expected to not recover too strongly,” Huong said.

Cam of VITAS also underlined challenges ahead for the textile and garment industry. “The pandemic lingers on and the Russia-Ukraine conflict will also affect the industry as Vietnam usually exports a large volume to those nations. In addition, the price of materials has also increased 20 per cent on average, and the situation is expected to continue in the coming months,” Cam said.

Meanwhile, Xuan of Lefaso also said that over past months, the association’s member companies have faced a 20 per cent rise in logistics and shortages of workers.

“They have also faced a halt in importing materials from China over the past two months. Additionally, they currently have no trucks and ships to transport goods, so they have had to delay inking new export orders. This will affect the industry’s performance in the second half of the year,” Xuan said.

The National Assembly’s Economic Committee warned that authorised agencies need to take great caution about “a possible danger of new pandemic outbreaks that could undermine the domestic economy’s recovery and especially exports.”

The committee warned of risks in expanding exports as global economic growth is expected to decrease from 3.6 to 4.4 per cent. For example, in April, the International Monetary Fund cut the rate to 3.6 per cent both in 2022 and 2023, down by 0.8 and 0.2 percentage points as compared to the fund’s January forecast.

The World Bank said that Vietnam’s manufacturing exports are expected to grow at a slower pace, mirroring moderating growth in Vietnam’s main export markets including the US, China, and the EU.

“Vietnam’s economy is now open to the world, so any fluctuations in the global market such as high inflation, high prices of materials, and supply chain disruptions can have negative impacts on the country’s macroeconomic stability, economic growth, inflation, and people’s incomes,” said Minister of Planning and Investment Nguyen Chi Dung.

By Nguyen Dat

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