VIETNAM’S EXPORTS HAVE EXPERIENCED CONTINUOUS DECLINE FOR FIVE CONSECUTIVE MONTHS
According to reports, Vietnam’s exports have been declining for five consecutive months in July, marking the longest drop in 14 years. Data released by the Vietnamese Statistics Bureau on the 29th showed that Vietnam’s exports contracted by 3.5% in July. In the first seven months of 2023, exports declined by 10.6% compared to the previous year, reaching $19.47 billion, while imports fell by 17.1% to $17.95 billion. After a rapid 8.0% GDP growth in 2022, Vietnam’s GDP growth rate slowed to 3.7% in the first half of 2023. The Vietnamese manufacturing industry is facing increasing resistance as the growth in the United States and the European Union slows down, with these two major export markets accounting for over 40% of Vietnam’s commodity exports. In May 2023, Vietnam’s goods exports dropped by 12.3% year-on-year.
The data indicates that overall inflation in Vietnam remained relatively stable in July, with a 2.06% change compared to the same period last year. However, housing prices rose by 1.9%. This year, the Vietnamese government set a target of 6% to 6.5% GDP growth for the entire year, but the decline in exports puts Vietnam, which heavily relies on foreign trade, at risk of not achieving this goal. The Vietnamese economy may continue to face some risks until the end of this year.
The textile industry, a crucial sector for solving Vietnam’s employment rate, has also faced significant difficulties this year. In the first quarter, Vietnam’s textile exports declined by 11.9%, with textile export orders dropping by 70% to 80%, resulting in the closure of 42,900 factories. In the second quarter, textile export orders in Vietnam further declined by 80%, leading to over 200,000 workers becoming unemployed in the second quarter of this year. The United States remains Vietnam’s largest export market, accounting for 29.4% of total merchandise exports. In 2022, Vietnam’s exports to the US increased by 13.6%, leading to a bilateral trade surplus of $95 billion. However, in the first five months of 2023, due to the global economic slowdown, Vietnam’s exports to the US dropped by 21.3%, and exports to Canada and the EU declined by 10.9% and 6.2% respectively. Textile enterprises are currently facing cash flow shortages, making it difficult for them to obtain loans, leading to bad debts and a challenging period ahead.
The manufacturing industry has slowed down in the first half of 2023 due to the impact of the export downturn. The challenges faced by Vietnam’s manufacturing industry in May and June were exacerbated by power shortages, causing disruptions in electricity supply. Heatwaves increased electricity consumption, while hydropower supply decreased, resulting in widespread interruptions in manufacturing output due to power cuts. Additionally, the days of cheap labor in Vietnam are over, as rising living costs make it difficult for the country to sustain its competitive edge based on low labor costs. Vietnam is a major exporter of electronics, apparel, textiles, footwear, and wooden products. The significant decrease in imports may indicate a further slowdown in industrial production, as businesses reduce their purchases of raw materials and equipment.
In the context of declining international market demand, the decline rate of new export orders is faster than that of new business volume. In fact, many Southeast Asian countries have long been strong competitors to China’s textile and apparel industry. Now, their export disadvantages may provide an opportunity for Chinese sellers. However, this does not necessarily mean reduced competition for sellers, as market demand ultimately favors those with real strength and marketing capabilities. Therefore, sellers should focus on enhancing their capabilities and demonstrating their strengths during the trading process.
