Vietnam' exports to face headwinds

Vietnam’s export value rose 20.9% YoY (8.5% QoQ) to about USD 96.28 billion in 2Q22.

According to GSO, Vietnam’s export value rose 20.9% YoY (8.5% QoQ) to about USD 96.28 billion in 2Q22. The growth rate improved significantly from the 13.5% yoy increase in total export value in the first quarter of 2022. All Vietnam’s top export products recorded a positive growth rate in 2Q22, including phones of all kinds (28.3%), electric goods and computers (16.0% yoy), machinery and equipment (41.6% yoy), textiles (22.7% yoy), footwear (18.6% yoy), wood & wooden products (2.8% yoy), automobiles (5.8% yoy), seafood (35.4% yoy), steel (13.5% yoy) and chemical products (26.7% yoy). For 1H22, Vietnam’s export value climbed to US$185.9bn (17.3% yoy).

However, Mr. Dinh Quang Hinh, analyst at VNDirect, said higher inflation, tighter global financial conditions and supply chain disruption would dampen growth prospects for the global economy, leading to lower demand for Vietnam’s exports in 2H22.

Most research institutions have lowered their global economic growth forecasts by 0.5-0.9% for 2022F to account for the economic consequences of the Russia-Ukraine crisis and tighter global financial conditions. Specifically, the longer-than-expected Russia-Ukraine tension and China’s strict lockdown add to fears over supply chain disruptions and slower global economic growth.

"The said fact will affect the production and export of enterprises in Vietnam, as in the case of Samsung, which has had to adjust its output plan this year. Consequently, we forecast export growth to slow down in the second half of 2022 and reach 14% for the whole of 2022", said Mr. Dinh Quang Hinh.

As for imports, Vietnam’s import spending reached USD 97.6 billion in 2Q22 (11.3% QoQ and 15.7% YoY). Vietnam’s import activities remained strong as the sustainable expansion of Vietnam’s manufacturing sector boosted demand for imported raw materials and input products, while resilient domestic demand accelerated the imports of consumer goods.

Among Vietnam’s imported products, the items that witnessed the strongest import growth rates in 2Q22 include coal (148.2% yoy), liquified petroleum gas (132.5% yoy), petroleum products (109.1% yoy), fruits and vegetables (43.9% yoy), other base metal products (40.1% yoy), chemicals (33.2% yoy), rubber (33.0% yoy) and fishery (31.4% yoy).

Although Vietnam’s exports faced a headwind in 2H22, export growth would reach about 14% this year. Therefore, Vietnam will record a trade surplus in 2022.

Vietnam recorded a trade deficit of USD 0.8 billion in 2Q22. For 1H22, Vietnam had a trade surplus of USD 0.7 billion. This figure was improved compared to the trade deficit of USD 1.9 billion in 2H21. For the full year of 2022, Mr. Dinh Quang Hinh expects Vietnam's trade balance to reach USD 7.2 billion, improving from last year's trade balance of USD 3.3 billion.