Promising outlook for exports as global markets show signs of recovery

Difficulties in first half

The Ministry of Industry and Trade (MoIT) reports that in the past five months, the country’s export revenue stood at US$136.1 billion, reflecting a decline of 11.6% over the same period from last year.

Along with a decrease in export orders, a fall in export goods prices can also be considered one of the factors leading to the five-month export turnover to nosedive.

With the exception of rice, coffee, and coal, the average export prices of tea, cashew nuts, pepper, rubber, and fertilizer dropped by 7.9%, 1.5%, 34.3%, 21.1%, and 35.2%, respectively.

The majority of industries have faced difficulties in their export markets due to decreasing demand globally. Industries such as textiles-garments, footwear, wood, and seafood endured the biggest decline in exports to major export markets such as the United States and the EU.

It is noteworthy that a number of export items, including seafood, wood and wood products, iron and steel, and plastics are coping with pressures from trade remedy investigations. The increased cost of input materials has also impacted the overall competitiveness of Vietnamese goods in export markets.

Though Vietnam enjoyed a trade surplus of US$9.8 billion during the first five months of the year, businesses specialising in textiles-garments, footwear, and woodworks struggled to look for export orders.

Positive outlook ahead

The MoIT forecasts that export activities are likely to recover strongly ahead in the second half of this year as inventories of goods in major markets, especially in the US, are decreasing significantly, with importers showing signs of placing orders again.

In the US, which is Vietnam’s largest import market for goods, its major retailers have released most of their excess inventory and are in the process of preparing to replenish their shelves with new goods. This will therefore open up opportunities for Vietnamese businesses to cash in on this lucrative US market in the second half of the year following many months of consecutive decline.

With inflation beginning to cool down in some markets, experts and managers anticipate that this represents an opportunity for export of consumer goods to recover over the coming months.

“The current decline is mainly due to problems from the market perspective, but in Vietnam businesses maintain their production capacity without any impact of factors such as COVID-19. This is an advantage to help businesses to stay ready for new export orders when the market rallies,” says Tran Thanh Hai, deputy head of the Import-Export Department under the MoIT.

FTA opportunities

Vietnam has signed 15 free trade agreements (FTAs) with regional and global partners, although its exports to FTA markets account for only about 2% of the total imports of these markets.

Of the market share, more than one third of export products take advantage of tax incentives and origin of goods. Therefore, there remains plenty of room for Vietnamese businesses to transform their production structure and increase the value of their products in potential markets.

In order to support businesses, the MoIT closely monitors any developments in the world market and seeks solutions aimed at simultaneously developing traditional outlets and diversifying export markets.

It recommends that businesses take fully advantage of the signed FTAs in order to effectively exploit markets and increase exports. To this end, it holds monthly trade promotion conferences and provides market information in a bid to iron out any snags.

Furthermore, the Ministry seeks to develop markets in Northern Europe, Eastern Europe, Latin America, and new markets that still have room for exploitation. At the same time, it is accelerating the negotiation of new FTAs with Brazil, Argentina, Uruguay, and Paraguay, while taking advantage of the rapid recovery of markets in ASEAN and some Asian countries to boost exports.