Expectation of export growth

Wednesday, 2021-04-07 09:52:27
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Workers at Son Nam Textile and Garment Joint Stock Company in Nam Dinh City produce cotton towels and yarn for export. (Photo: NDO)
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NDO – Despite facing multiple difficulties due to the complicated development of COVID-19, container shortages and rising transportation costs, Vietnam's exports in the first quarter still recorded positive results, making an important contribution to the nation’s overall economic growth.

Strong recovery

According to the Ministry of Industry and Trade, the first quarter saw a strong recovery in import and export activities. Specifically, total import and export turnover in the first quarter was estimated at US$152.65 billion, up 24.1% over the same period last year.

Of which, export turnover of goods reached US$77.34 billion, up 22%, while import turnover reached US$75.31 billion, up 26.3%, resulting in a trade surplus of US$2.03 billion. The major contributor to the export growth in the first months of the year was the foreign invested sector, with a turnover ratio of 76.2%. On the other hand, the domestic economic sector also grew well at 4.9%, reaching US$18.3 billion.

The export turnover of almost all products in the processing industries has also grown well. Of which, telephones and accessories reached the highest turnover of US$14.08 billion, up 9.3%, followed by exports of computers, electronic products and components with US$11.96 billion, up 31.3% over the same period last year. In particular, the group consisting of machinery, equipment, tools and spare parts surpassed textiles and garments to rank third in export turnover, reaching US$9.1 billion and up 77.2% compared to the first quarter in 2020.

In addition, the export turnover of many other items also increased sharply, such as wood and wood products increasing by 41.5%, means of transport and spare parts by 20%, and iron and steel of all kinds increasing by 65.2% over the same period last year. In particular, textile and garment exports only achieved a modest growth of 1.1% (US$7.18 billion), but also showed signs of recovery.

Export data also shows that enterprises are making effective use of the now-signed free trade agreements (FTAs). Since the EU - Vietnam FTA (EVFTA) took effect in August 2020, the growth rate of exports to the EU has gradually improved and increased to 18% in the first three months of 2021. Similarly, Vietnam's exports to partners in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) also recorded high growth in the first quarter, with Canada increasing 13.7%, Australia up 17%, Chile 25.6%, Mexico 12.7%, and New Zealand 35.1%, respectively. With the impact of the United Kingdom - Vietnam FTA (UKVFTA) which is temporarily taking effect, export turnover to the European nation in the first months of the year also increased by 22.1%.

In the opposite direction, imported goods also showed a quite positive sign as import turnover of materials for production was estimated at US$70.58 billion, up 26.8% over the same period and accounting for 93.7% of the total, while import turnover of consumer goods is estimated at US$4.73 billion, accounting for only 6.3%. Director General of the General Statistics Office of Vietnam (GSO) Nguyen Thi Huong said that a sharp increase in the import of materials for production means that domestic production is showing signs of strong recovery.

Opportunities for growth

The Ministry of Industry and Trade believes exports in the near future are expected to continue to flourish thanks to the recovery of the world economy as well as the more fully and comprehensively implemented FTAs. Global demand will also improve as the world economy enters a recovery period thanks to the strong rollout of COVID-19 vaccinations, while countries' fiscal and monetary easing policies should increase opportunities for Vietnam's exports.

Moreover, new generation FTAs ​​such as the CPTPP, EVFTA and UKVFTA are expected to create favourable conditions for Vietnamese goods to enter partner markets with more preferential tariffs as well as reducing to the lowest level of barriers. Therefore, continuing to make good use of the advantages from the FTAs ​​will be one of the important factors in promoting Vietnam’s exports in the coming time.

On the other hand, the average export prices of many items also increased over the same period. Specifically, the price of pepper increased the most by 31.5%, reaching an average of US$2,879 per tonne, rice prices increased 18.6%, reaching US$547/tonne, coffee increased by 6.8%, reaching an average of US$1,801 per tonne, tea increased 10.2%, averaging US$1,604/tonne, rubber up by 14.1%, reaching an average of US$1,660 per tonne.

However, there are still difficulties and challenges for exports as the global COVID-19 epidemic is still complicated, although many countries are now promoting their vaccination campaigns. In Europe, many major economies such as Germany, France or Italy continue to have to extend their lockdown orders in many areas against the spread of the epidemic. The resurgence of the COVID-19 epidemic makes it difficult for the transportation of goods, and as supply chains are interrupted, Vietnam’s exports are affected.

Meanwhile, input costs such as logistics or high import material prices have also negatively affected the production and export activities of Vietnamese enterprises. In fact, many businesses have been forced to delay their export plans for old orders and cannot receive new orders because they cannot currently deliver on time, hindering the production recovery of enterprises. Besides this, recently, many export markets for the agricultural and aquatic products of Vietnam have made changes in their food safety certification regulations, such as China, the Republic of Korea or Australia.

GSO Director General Nguyen Thi Huong suggests Vietnam should continue to make use of FTAs, especially CPTPP, EVFTA and the Regional Comprehensive Economic Partnership (RCEP) to promote its export activities in the coming time, while improving competition opportunities and the value of exported goods, especially those with which Vietnam has advantages. It is also important to continue to focus on solving difficulties for enterprises and promoting the recovery in domestic production in order to create momentum for exports.

The Ministry of Industry and Trade also announced it will focus on exploiting and taking advantage of opportunities from FTAs to find solutions to develop markets and remove barriers to entry into new markets.

It is crucial to continue to closely monitor developments of the COVID-19 epidemic in the world and to take timely response measures, closely follow the situation of each market to identify the types of domestic goods that can increase export opportunities, and give priority to export promotion activities to markets that have recovered after the pandemic, while consolidating, expanding and diversifying these, especially small and niche markets, in addition to diversifying product structure, improving export product competitiveness and developing brands.