Exports End 2022 as Expected Despite Pressures

The import and export value in 2022 set many historical milestones, exceeding US$700 billion for the first time, and taking in a trade surplus of US$10 billion.

Exports keep a growth pace

According to the Ministry of Industry and Trade, exports may reach US$372-374 billion in 2022, up 11% over 2021 and higher than the planned growth target.

High growth momentum was maintained amid difficulty in world markets. As a result, the trade surplus continued to be widened, helping stabilize the economy and exchange rate. The export value was estimated at US$342.2 billion in 11 months of 2022, representing an annual growth of 13.4% and the trade surplus was forecast at US$10.6 billion.

Besides, the structure of exports changed positively. The value of industrial and manufactured goods was estimated at US$294.5 billion, up 13.3% year on year and accounting for 86.1% of total export value. This continued to be a driving force for export growth.

Seafood is a new member of the "US$10 billion export club", impressively earning over US$11 billion from exports, an increase of more than US$2 billion as compared to 2021. Tuna exports made a record of over US$1 billion, shrimp earned more than US$4 billion, and pangasius brought home over US$2 billion. They all made double-digit export growth.

Fertilizer exports grew the most, 2.3 times higher than the same period in 2021. Timber and woodwork exports reached US$14.6 billion despite facing numerous difficulties, up 9% year on year.

Vietnam exported 3.2 tons of rice for nearly US$6.7 billion to reach the yearly targets, up 16% in volume and 7% in value year on year. Coffee exports reached a record of nearly 1.7 million tons worth US$3.5 billion in value in 11 months, up 31% year on year.

In addition, some exports made impressive growth. The export value of bags, suitcases, hats and umbrellas soared 39%; the export of textiles and garments jumped 18.5%, and the export of minerals and fuels surged 33.5%, over the same period last year.

The impressive export outcome in 2022 comes from good opportunities generated by free trade agreements (FTAs). All FTA partner markets grew well, with shipments to the European Union (EU) rising by 23.5% and exports to Southeast Asia going up by 23.3%.

Potential challenges

Despite good performance, exports will still face numerous challenges in the coming time. Inflation will cause prices to escalate, weaken purchasing power, and increase inventories. Moreover, military conflicts in the world will disrupt supply chains and pose many risks to the input supply. Production and export of most industries will meet with difficulties as input costs increase, especially in inputs for garment production and seafood production.

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), November exports slumped 14% year on year. The sharp drop in orders was not only seen in high-priced items such as black tiger shrimp, large-sized vannamei shrimp, squid, octopus and tuna, but also in moderately priced products such as small shrimp, pangasius, fish cakes and surimi. The development is likely to continue in December of 2022 and last into the first quarter of 2023.

Without exception, for the first time in two years, the textile and garment industry recorded negative growth. According to the Vietnam Textile and Apparel Association (VITAS), orders for the first quarter of 2023 of garment companies in Ho Chi Minh City all decreased by 20%-30%.

A representative of the Ho Chi Minh City Rubber and Plastic Association said that exports to European and American markets weakened since late September, with export orders falling by nearly half. Worse, domestic orders also dropped 20%.

Regarding solutions to deal with difficulties and challenges, the Ministry of Industry and Trade has stepped up measures to utilize FTAs, popularized and implemented the Regional Comprehensive Economic Partnership (RCEP) to diversify export markets as well as import supply sources. The ministry has also strengthened supply-demand matching for domestic manufacturers and foreign partners. For the first time, the ministry has periodically held briefings between its agencies and the overseas Vietnamese trade system with localities, industry associations and enterprises; and organized trade promotion events and developed innovative markets based on information technology applications and digital transformation.

The Ministry of Industry and Trade recommended that relevant agencies closely monitor market developments and proactively assess impacts on production, export and import of Vietnam in order to promptly make appropriate adjustments and responses. At the same time, information and forecasts of domestic and global commodity markets, as well as new policies and regulations in major markets for Vietnamese goods, will continue to be strengthened to facilitate prompt responses by businesses.

The ministry recommended companies continue to tap the advantages from FTAs and apply digital transformation in communication, trade promotion and brand development. Besides, businesses must invest in improving competitiveness and create high-quality products that meet strict world market standards. Business associations and industries need to further promote the connection between authorities and companies, and protect the legitimate rights and interests of businesses in international trade disputes.

 By Huong Ly, Vietnam Business Forum