[Thị trường] In the second half of 2023, Vietnam’s export sector made an impressive turnaround against the current, as highlighted | Singhang Logistics.

Overcoming numerous challenges posed by the unfavorable global economy, the world’s aggregate demand is declining, significantly impacting commercial activities. However, starting from the latter months of 2023, Vietnam’s exports have shown promising signs of recovery.
The forecast for export activities in 2024 anticipates continued challenges and uncertainties, compelling Vietnam to exert greater efforts to sustain the export recovery momentum, aiming for a growth of at least 6% compared to 2023.

Due to its highly open economy, Vietnam faces challenges in escaping the unfavorable consequences of external influences. This is one of the crucial factors that will impact the macroeconomic situation, the overall growth rate of the economy, and the recovery momentum of Vietnam’s exports in the next phase.

Gradually regaining growth momentum since the second half of 2023.

According to the forecast by the World Trade Organization (WTO),

• world trade contraction is forecasted to increase by 0.8%, halving the initial WTO prediction of 1.7% at the beginning of the year, due to ongoing global political and economic uncertainties.
• The costs of input materials, production, and global logistics are on the rise;
• Inflation persists at elevated levels in many countries, albeit showing a moderated pace, leading to a trend of reduced consumer spending, especially in key importing nations such as the United States and the EU, causing a decline in consumer demand.

Additionally, trade protectionism and price differentials in exporting countries with similar goods have escalated. Meanwhile, major importing nations continue to erect additional technical barriers, exerting new pressure on export commodities. This has had a significantly negative impact on Vietnam’s export activities from the early months of the year.

Compared to the region with foreign direct investment, the average exports in the first quarter of 2023 decreased by 11.8%. Within this context, the domestic economic region experienced a more significant decline, dropping by 17.4%, compared to the foreign direct investment region which saw a 10% reduction.

However, from the end of the second quarter of 2023, there have been signs of recovery as monthly exports surpassed the previous month’s figures. In May 2023, there was a 4.3% increase compared to the previous month; in June, it rose by 4.5%; in July, there was a 0.8% increase, and in September, it surged by 9%.

By the end of the year, the decline in exports had narrowed down to 4.4% compared to 2022.

Significantly, when compared to the decline in exports of other countries in the same region, the overall recovery of our country’s exports is noteworthy. Specifically, as of the end of the first nine months of 2023, Malaysia’s exports decreased by 11.7%; Indonesia’s by 12.3%; Singapore’s by 10.8%; Thailand’s and the Philippines’ by 3.8% and 6.5%, respectively; South Korea’s by 11.5%; Japan’s by 5%; and China’s by 5.7%, compared to the same period.

Despite this, amidst the challenging global economic conditions, the domestic economic region is also making efforts to explore and develop export markets. In 2023, the export reduction rate of the trade surplus region (estimated at 0.9%) is significantly lower than the anticipated reduction in the foreign direct investment region (expected to decrease by 5.9%). It is also relatively low compared to the overall national export reduction rate.

According to the Ministry of Industry and Trade, a significant portion of these achievements is attributed to Vietnam’s effective implementation of the market diversification program during a period when exports to key markets were declining. The export turnover to traditional markets in Africa, Eastern Europe, Northern Europe, and Western Asia has all experienced high growth rates.

In addition, effective market regulation and exploitation of the export market to China have prevented congestion, particularly during peak seasons, contributing to the overall growth of the export turnover to this market. In the 2023 export plan, China is also the only major export market for Vietnam that experienced a growth rate of 8.1%, amidst a simultaneous decline in other export markets such as the United States and the EU.

The most notable feature in this year’s export landscape is the continuous surplus in the balance of payments for the eighth consecutive year, with an estimated trade surplus of 28 billion USD, approximately three times higher than in 2022. This substantial contribution significantly enhances the trade balance, contributes to increased foreign exchange reserves, stabilizes exchange rates, and positively influences various other macroeconomic indicators of the economy.

The Head of the Trade and Services Statistics Department (General Statistics Office), Nguyen Viet Phong, remarked that the merchandise surplus of 28 billion USD is primarily attributed to the slower growth in imports compared to exports (-8.9% versus -4.4%).

However, positive signals also arise from Vietnam’s merchandise import organizations as the growth rate of imports in Q4/2023 was positive in both domestic and foreign direct investment regions, despite sharp declines in the past three quarters, with the highest increase in December.

Specifically, comparing the same period, the total import turnover in December 2023 increased by 12.3%. Broken down, the domestic region increased by 7.6%, and the foreign direct investment region increased by 15.1%.

In December, some natural raw materials for export-oriented activities also showed relatively positive growth signals, including a 24% increase in fiber, a 16.5% increase in cotton, and a 33.6% increase in raw materials for textiles, apparel, and footwear.

It is hopeful that the global market is showing signs of recovery, and with the positive signals from both exports and imports mentioned above, it is expected to stimulate Vietnamese businesses to initiate increased imports. This, in turn, could set the stage for fostering optimistic export growth throughout the year 2024.

Despite the positive outlook, there are still many challenges ahead.

The export activities have seen more positive changes as the global and domestic economic situations have shown more positive developments. The Federal Reserve (Fed) has signaled a halt to interest rate hikes and is moving towards lowering interest rates in 2024; the situation of high commodity inventories in the United States is also fundamentally improving.

However, the Import and Export Department (Ministry of Industry and Trade) acknowledges that the export situation in 2024 is facing more challenges and difficulties. This is due to the increasing trend of trade liberalization, with countries implementing various measures to bring investments back domestically, erecting additional trade barriers for protectionism, and encouraging domestic investment.

Advanced countries such as the United States and the European Union are highly concerned about green growth and have been implementing various new policies such as the Carbon Border Adjustment Mechanism, and European Forest Protection Regulation, which affect some of Vietnam’s key export industries.

Overall, external pressures on Vietnam’s export activities in 2024 will stem from several channels: the global trade channel as many major trading partners of Vietnam experience slow growth, resulting in a delayed strong recovery in demand, thereby impacting export activities; the international financial channel with the pressure of the depreciation of the domestic currency against the USD, although it provides positive support for exports, it will raise the costs of importing raw materials for processing and may increase the scale of international loan repayments;…

Meanwhile, Vietnam’s exports still face many internal limitations as they heavily rely on the FDI sector (constituting about 73% of the total national export turnover); the value-added in exports has not met expectations; export costs to most key markets have decreased, although the rate of decline is gradually narrowing;…

Therefore, to achieve the goal of export recovery with a growth of around 6% compared to 2023, the Import and Export Department will focus on implementing various measures to support businesses:

• Utilizing commitments in free trade agreements (FTAs) through promotion of rules of origin and issuance of certificates of origin, identifying opportunities and ways to leverage advantages from FTAs.
• Enhancing market information provision through digital platforms to assist businesses in overcoming new trade barriers in import markets.

Minister of Industry and Trade Nguyen Hong Dien stated that in the face of ongoing global uncertainties and challenges, the year 2024 holds significant importance for the successful completion of the strategic 5-year mission (2021-2025).

In such conditions, to achieve and surpass the set goals, the Ministry of Industry and Trade will continue to promote deep and extensive economic integration and actively advise on effectively exploiting advantages from international cooperation with major countries to stay ahead in the trend of shifting high-tech industrial investment to the third country of multinational corporations. Particularly, focusing on sectors where Vietnam has potential and advantages, including:

• Semiconductor technology.
• Digital infrastructure.
• Logistics infrastructure.
• Renewable energy.
• New material technology.
• Exploitation and processing of precious minerals, chips, and semiconductors.

The Ministry will also enhance the effective implementation of measures to closely connect foreign-invested enterprises with domestic businesses to promote the development of management skills, knowledge transfer, and contribute to enhancing the competitiveness of Vietnamese enterprises, meeting the increasing requirements for deeper integration into global production and supply chains.

In addition, the Ministry is effectively implementing the role of the Vietnam Trade Office system abroad in supporting provinces and businesses to exploit the advantages of FTAs of which Vietnam is a member, aiming to expand markets, and consumer networks, and boost exports. The Ministry is also intensifying promotion efforts, initiating new agreements, and upgrading existing FTAs with countries that have significant demand in the Middle East, Africa, South America, etc.

At the same time, enhancing support for businesses to shift strongly towards traditional exports combined with brand development to promote sustainable exports. To exploit the potential of the domestic market more effectively

The Ministry is also focusing on intensifying trade promotion activities, harmonizing traditional trade with information technology, e-commerce, and circular economy; strengthening market management and enhancing trade defense capabilities, and protecting production and consumer interests in line with international commitments.