Vietnam on track for Q2 export breakthrough, economist predicts

Order intake is expected to recover further. The forecast for Vietnam's exports indicates a breakthrough in the second quarter and this year as a whole, Vietnamese economist Dinh Trong Thinh told Cong Thuong (Industry and Trade) newspaper.

Electronics production at Katolec Vietnam in Quang Minh Industrial Park, Hanoi. Photo: Pham Hung/ The Hanoi Times

In the new context of economic growth, a number of local experts recently highlighted the importance of stimulating aggregate demand. What is your opinion on this?

It is important to stimulate aggregate demand to reduce inventories, boost production and business and increase exports.

Therefore, Vietnamese companies need to take the initiative to seek foreign orders to boost exports. Currently, many of them have orders until the end of June 2024, so finding orders will be crucial in the following quarters.

In terms of public investment, Vietnam achieved a rate of 93.5% in 2023 (falling short of the 95% target set by the Prime Minister). Nevertheless, this was a significant effort, as public investment capital increased by more than 23% compared to 2022.

Public investment capital for 2024 is estimated at VND 657 trillion (almost US$ 25.9 billion). Although this figure is lower than in 2023, it still represents a significant amount of capital.

More important, however, is the implementation of public investment this year, which will face difficulties, partly because the construction of highways in the Mekong Delta is facing a shortage of earth for grading.  

Finding solutions to these challenges, such as securing construction materials and speeding up land clearance, will help boost public investment. In this way, the targeted disbursement rate of 95% in 2024 can be achieved.

Domestic consumption in the first quarter of 2024 grew at almost 9%, which is not high but shows an improvement in 2023.

Before that, however, domestic consumption had been growing at close to 20% for years. Stimulating domestic demand is, therefore, now a key issue.

Measures have been taken by the government and various ministries and sectors to stimulate domestic consumption, such as a 2% reduction in VAT, fees, charges and land rents. However, the impact of these measures remains weak.

To boost domestic consumption, in addition to government measures, local companies need to reduce production costs, lower prices and run promotional programs to achieve the highest possible sales volume. This also depends on another factor, namely income.

In 2023, workers' incomes did not rise or rose slightly. As a result, consumers saved money and were reticent to spend. Therefore, an increase in workers' incomes is also an important factor in boosting domestic aggregate demand.

Based on the socio-economic results achieved in the first quarter of 2024, what do you expect to happen in the second quarter?

Vietnamese economist Dinh Trong Thinh. Photo: VGP

The economic situation will be better in the second quarter. This is because the first quarter of 2024 saw the highest economic growth rate in the past five years.

This is a remarkable result. In addition, inflation has been controlled, and the number of business registrations has increased compared to the same period last year. Foreign investment has also risen sharply, marking favorable prospects for economic growth (GDP) in the second quarter.

Improved economic growth will have a positive impact, leading to higher incomes for people and increased inputs into production, thereby boosting domestic aggregate demand.

What are your predictions for the second quarter in terms of exports?

In the second quarter of 2024, the export situation will remain positive as foreign orders continue increasing. Many companies have orders in hand until the end of the third quarter. I expect exports to perform better in the third and fourth quarters.

In particular, key destination markets such as the US have significant consumer demand. In the first quarter of 2024, Vietnam's exports to this market showed excellent growth.

According to the Ministry of Industry and Trade, the US was Vietnam's largest receiving market in the first quarter of 2024, with an estimated turnover of $26.06 billion, accounting for 28% of the country's total export turnover, and increasing by 25.5% compared to the same period last year (falling by 21% in the same period of 2023).

The US is also creating favorable conditions to promote trade activities between the two countries. In addition, Vietnamese companies also have a good understanding of export market requirements and regulations.

I therefore believe that Vietnam’s export activities in the second quarter of 2024, as well as throughout the year, will see significant progress.