As the world re-opens, opportunity emerges for Vietnam’s exports

Many countries are promoting vaccinations and reopening their economies. As a result, demand for Vietnam's textiles, footwear, furniture, and electronic products is on the rise.

Data from the General Department of Customs of Vietnam shows that Vietnam’s import and export revenue was very impressive in the January-July period of 2021. The total import-export value was estimated at US$371.16 billion, up by 29.5% compared to the same period of last year. The total export value was estimated at US$184.33 billion, up 24.8% and total import value at US$186.83 billion, up 34.4%.

However, the COVID-19 pandemic made a slight impact on Vietnam's import and export of goods in July. The total export value of July was estimated at US$26 billion, down 4.4% and the total import value was estimated at US$26 billion, down 0.6%.

Although 7-month exports increased by more than 50%, the export value of wood and wood products in July 2021 was estimated at US$1.3 billion, down 16.6% compared to the previous month.

Export of crude oil decreased by 52.8% month-on-month, footwear export decreased by 11.8% month-on-month; seafood decreased by 5.8%; computers, and electronic products and components were down 15.5%.

The Ministry of Industry and Trade said the strong outbreak of the COVID-19 epidemic along with social distancing measures in many provinces and cities such as Hanoi, Ho Chi Minh City, and 16 southern provinces and cities have affected the circulation of goods, leading to a disruption of supply chains and affecting production and business activities.

The index of industrial production (IIP) in July 2021 only increased by 1.8% compared to the previous month and by 2.2% over the same period last year, which is the lowest increase in the past seven months (except for February with the least number of working days).

According to the Ministry of Industry and Trade, in the coming time, import and export growth will depend greatly on disease control as well as the vaccination process in the country.

Statistics of the General Department of Customs show that Vietnam's trade balance in July 2021 incurred a deficit of US$1.5 billion, raising the total deficit in the past seven months to US$2.5 billion.

Outlook remains stable

The Ministry of Industry and Trade forecasts that the demand for exports is still quite high. The fact that countries are vigorously implementing vaccination and reopening their economies has increased demand for Vietnam's textiles, footwear, furniture, and electronics. Besides, a number of economies continue to implement demand stimulus packages, through direct support to people, thereby promoting the consumption of goods, including those imported from Vietnam.

At the same time, free trade agreements are gradually being implemented in a more comprehensive and effective manner, which is expected to promote Vietnam's export industries.

Imports of raw materials for production usually increase in early months and decrease in the second half of the year, which is also the time when exports reach the peak. Demand for Vietnam's exports will continue to increase in the second half of 2021, especially for electronics, machinery and equipment, furniture, textiles and seafood.

The trade balance is forecast to improve in the coming time even though the trade deficit for the past seven months is currently at US$2.5 billion.

The prospect for Vietnam’s exports in the remaining time of the year comes from the Chinese market. China's slash of production in a number of industries such as iron and steel, textiles, wood and wood products due to factors related to the shift in demand of the US market after US-China trade tension and commitment to reduce emissions will bring many advantages to Vietnam's investment, production and import-export activities.

According to the Ministry of Industry and Trade, over the past, Vietnam has been considered the first choice of American fashion companies to replace part of the sources from China. The reason is that production cost in Vietnam is cheaper than in China and India, and the efficiency is higher in than Bangladesh. In 2020, Vietnam's garment exports to the US fell the lowest percentage compared to other exporters thanks to Vietnam's competitive advantages. Specifically, China witnessed a decrease of 39.2%, India 25.6%, Bangladesh 11.7%, Indonesia over 20% and Vietnam only 7.2%.

Vietnam's wooden furniture industry in 2020 also surpassed China to become the number 1 exporter to the US. Meanwhile, China's increased demand for imports of raw materials in the first months of 2021 also boosted Vietnam's exports of these items to this market.

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