Exports are on the rise, with trade surplus

Monday, 2019-03-25 17:32:59
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Despite a two-month trade deficit, Vietnam is witnessing a trade surplus
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NDO - After a two-month trade deficit, the economy is expected to witness high export turnover this year thanks to buoyancy in export-oriented manufacturing fuelled by multilateral trade pacts.

According to the General Department of Vietnam Customs, total export-import turnover of Vietnam from January 1 to March 15 hit US$93.6 billion, with total export turnover of US$47.05 billion and total import turnover of US$46.55 billion, leading to a surplus of US$500 million.

Earlier, in the first two months of this year, Vietnam suffered from a trade deficit of US$84 million, with total export turnover estimated to be US$36.68 billion, up 5.9% on-year.

Such a low rise in two-month export turnover is ascribed to the slowdown in exports during the nine-day lunar New Year holiday in February, when total export turnover touched US$14.6 billion, down 33.9% on-year, with a sharp on-month reduction of many key exports, such as electronics, computers and their spare parts (23.9%), steel (45.8%), footwear (49.1%), garments and textiles (US$51.4%), aquatic products (52.8%), and wood products (59.2%).

“Despite the go-slow in export turnover in the two months, we should not be pessimistic, because, under our calculations, the economy’s total export turnover will at least reach the National Assembly’s (NA) target for 2019,” Nguyen Trung Tien, head of the GSO’s Department for Trading and Service Statistics Department, told Nhan Dan Online.

The NA has set a target that, in 2019, the GDP will grow by 6.6-6.8%, with total export turnover climbing 7-8% on-year.

Last year, total export turnover reached US$243.48 billion. Thus, based on the NA’s expectation, the total export turnover this year is expected to be US$260.52-263 billion.

“We even feel optimistic about the country’s export picture this year because Samsung has launched its Galaxy S10 mobile phone, which will help improve the export situation in the coming months,” Tien said, adding that both exports and imports for this year will be higher than last year’s thanks to a soar in domestic production.

Clearly, in the first 15 days of March, the economy enjoyed a trade surplus of close to US$0.61 billion, with total export and import turnover of US$10.95 billion and US$10.34 billion. This means that local production has been on the rise after the holiday.
Under the World Bank’s recent report on Vietnam’s economy and its outlook for 2019, Vietnam’s export picture is expected to remain bright this year thanks to the country’s free trade agreements (FTAs) with partners, and its diversification of export markets.

“Vietnam is now the global export champion. Since 2017, its export turnover has always been on top of the region, with the ratio of trade in GDP currently sitting at 208%,” said Ousmane Dione, the World Bank country director for Vietnam. “It is because Vietnam has been effectively joining FTAs, which have helped to diversify its export markets.”

According to the World Bank, Vietnam’s export-oriented manufacturing industry is on the rise.

“Manufacturing exports now account for around 85% of total exports, up from 65% in 2010, driven by dynamic growth in the export-oriented foreign sector. Higher-value manufacturing exports, such as phones, computers, cameras, and electronics and related components have increased from a 5% share in 2010 to an estimated 35% in 2018,” said the report.

The bank stated that Vietnam’s exports are “becoming more sophisticated”, and “Vietnam’s strong export performance is underpinned by impressive diversification of its export basket in the last eight years.

Among its trade partners, the US remains Vietnam’s largest, accounting for 19.5 percent of Vietnam’s total exports. This is followed by the EU, Southeast Asia, China, Japan, and the Republic of Korea.

According to a fresh report on Southeast Asia’s economy by Fitch Solutions under Fitch Ratings Inc., one of the world’s three biggest rating agencies, Vietnam’s economy has been buoyed by the export-oriented manufacturing sector benefiting from strong foreign direct investment and global growth.

“We expect the manufacturing sector to remain a key economic driver and to outperform the region. Vietnam has grown to become a manufacturing powerhouse, particularly in electronics, due to its relatively cheap and large labour force, geographical advantages, attractive tax breaks, stable political environment, and open-door trade policies,” said the report. “The opening up of the Vietnamese economy also came at an opportune time, as China had begun to shift away from lower-end and export-oriented manufacturing, to focus more on the domestic economy, allowing the former to gain a market share.”

“Additionally, Vietnam’s continued commitment towards economic liberalisation will also attract foreign manufacturers to the country to leverage on its preferential trade access. To be sure, Vietnam is a signatory to 10 bilateral and multilateral FTAs, with six more trade pacts in the pipeline, including the highly touted Vietnam-EU FTA.”

According to the General Department of Customs, in 2018, Vietnam’s total export-import turnover hit US$480.17 billion last year, up 12.2% on-year, and witnessed a trade surplus of US$6.8 billion.