The country’s exports continue to help it excel the region’s average growth.
The IMF and ASEAN Macroeconomic Research Office both forecasted Vietnam’s economic growth between 7% to 8% exceeding the start of the year expectation of 6%. Vietnam continues to buck supply chain problems as well general slow economic growth due to being significantly established and integrated into the world’s supply chain system. This growth in exports continues to push economic growth despite Vietnam only growing at 3% during the pandemic.75% of Vietnam’s exports consist of garments, electronics and smartphones which have now seen increased demand as consumers get ready to spend after a slow couple years in the pandemic.
While other parts of the economy suffered during the pandemic, exports surprisingly didn’t suffer too much as there was a total of 19% growth from 2019 to 2021. This is expected to continue moving forward with export growth projected to reach 14.5% and foreign direct investment hitting 4% of the gdp in just the year 2022. Vietnam has signed more than a dozen free trade agreements in recent years, including one with the European Union and an 11-country CPTPP deal that will slash tariffs across much of the Asia-Pacific. Vietnam’s exports in the January-July period rose 16.6 per cent from a year earlier to $216.66 billion, the second half of the year will see a slightly lower growth as the world fears upcoming recession but the ministry of exports remains confident that its exports will remain stronger than most other countries.
Clothing still remains a stable component of Vietnam’s export growth and a key reason in making Vietnam the 3rd largest exporter in the world after China and Bangladesh. The latest data from the Customs Department of Vietnam show clothing and textile exports for the period January to mid-September reached US$27.50bn from $22.15bn a year earlier. Vietnam‘s trade-in-goods from January to the first half of September totalled $526.04bn in value terms. It posted an increase of 15.7% (equivalent to $71.46bn) from the same period of previous year, forecasting a positive outlook for the rest of the year and the future. China’s supply chain problems only serve to help Vietnam as consumer shift their demand towards it.
Vietnam’s export industry does face some headwinds as global growth is set to slow amid effects from Russia’s invasion of Ukraine, and the slowdown in China and major advanced economies. High inflation in many of Vietnam’s key markets, including the United States and European Union, would crimp consumer spending there and reduce demand for Vietnamese products. The Vietnamese government intends to follow a flexible monetary policy to ensure macroeconomic stability which should help Vietnam avoid a growth slowdown unlike other countries which might be affected strongly.
While these may seem like big obstacles for the export industry, the government remains confident of following a strategy to address any challenges to export growth and by extension economic growth. As the country’s development strategy includes reforms on labour, sustainability and inclusive green growth, Vietnam is set to manage any risks it might face and will continue to advance on a stable, sustainable development path built on its strong export industry foundation and may very well make a full recovery from the pandemic slowdown.
Thao Nguyen is ABP’s Country Manager – Vietnam. She is a dynamic leader with over 27 years of experience working for both global and local banks in Vietnam. Over the course of her career Thao has held senior leadership roles at HSBC, Citibank, ANZ, Techcombank and VIB
Stay up to update with our latest news.