Vietnam trade performance much dependent on Covid-19 situation
Vietnam trade performance much dependent on Covid-19 situation
Potential disruption of supply chains as a result of the pandemic is making it hard for local enterprises to fulfill their contractual obligation to partners.
Vietnam’s trade performance for the remainder of 2021 would be much dependent on the progress of the pandemic containment in the country, according to the Ministry of Industry and Trade (MoIT).
Production at Garment 10 Company. Photo: Thanh Hai
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Despite the current severe Covid-19 outbreak across the country, especially in Ho Chi Minh City and southern provinces/cities, Vietnam’s trade turnover in the first seven months of 2021 remained an improvement compared to the same period of last year.
For the January-July period, total trade turnover sharply rose by 30.2% year-on-year to US$373.3 billion, of which exports hit $185.3 billion, up 25.5%, and imports totaled $188 billion, or an increase of 35.3%.
According to the MoIT, there are 27 groups of export products with a revenue of over $1 billion, in turn accounting for 90.2% of total exports. Among them, phones and parts contributed the largest portion with $29.4 billion, or 15.8% of the total; followed by electronics, computers, and parts ($27.4 billion), machinery ($19.7 billion); textile and garment ($18.6 billion); and footwear ($12.1 billion).
Meanwhile, the US continued to be the largest export market for Vietnam’s products with a turnover of $53.7 billion, while China and the EU made up the remaining two in the top three.
While the country recorded a trade deficit of $2.7 billion for the seven-month period, a stark contrast from a surplus of $8.7 billion in the same period of last year, Deputy Minister of Industry and Trade Do Thang Hai expected the situation to improve in the coming months as exports normally reach its peak in the last half of the year.
“Demand for Vietnam’s exports are set to surge in the final months of 2021, especially for electronics, machinery, wooden products, textile, and seafood,” said Hai.
Another key factor was an agreement between the State Bank of Vietnam and the US Department of the Treasury on Vietnam’s currency practices on July 24, prompting the US Trade Representative (USTR) to ensure that it would refrain from imposing trade remedies on Vietnam’s export products.
Thang, however, acknowledged that the pandemic situation remains a decisive factor for trade performance.
“Covid-19 situation is jeopardizing companies’ operation, which put them at risk of facing order cancellation from foreign buyers,” he added.
Sharing the view, economist Nguyen Tri Hieu told The Hanoi Times a potential disruption of supply chains as a result of the pandemic is making it hard for local enterprises to fulfill their contractual obligation to partners.
“It is imperative for Vietnam to diversify both import and export markets and avoid over-dependence on certain markets,” Hieu said.
In this regard, Director of the WTO Center and Integration under the Vietnam Chamber of Commerce and Industry (VCCI) Nguyen Thi Thu Trang called for local firms to better take advantage of the EU-Vietnam Free Trade Agreement (EVFTA) and other trade deals that the country is a part of to enhance their market penetration capabilities.
