Despite the negative impacts of the US-China trade war on the global market, Vietnam is expected to see a new record in trade turnover this year, thanks to a rise in both exports and imports, given surging domestic production and export prices.
Mai Tien Dung, Chairman and Minister of the Government Office, last week surprised the government-led press conference by announcing that according to the government’s calculations, Vietnam will likely witness a total export-import turnover of $475 billion, including $238 billion of exports and $237 billion of imports this year. Thus, the trade surplus for 2018 will be $1 billion.
This performance will break last year’s record when the economy’s total export-import turnover reached $424.87 billion, with export turnover of $213.77 billion and import turnover of $211.1 billion. Total trade surplus was $2.67 billion.
“The economy’s export situation is quite bright. This year, the total export turnover will likely increase by 11.2 per cent against last year, higher than the goal of 7-8 per cent set earlier by the National Assembly,” said Tran Quoc Phuong, director of the Department of General Economic Affairs under the Ministry of Planning and Investment (MPI).
“Notably, the growth in exports from domestic enterprises is expected to outpace that of foreign-invested enterprises (FIEs) this year,” Dung said. “Meanwhile, both have been equally boosting imports.”
In the first nine months of this year, total export-import turnover is estimated to hit $352.43 billion, far higher than the $308.12 billion in the same period last year. Notably, Vietnam enjoyed a record trade surplus of $5.39 billion during the period, which Prime Minister Nguyen Xuan Phuc called “a laudable record.”
Increase in both exports and imports
According to the MPI, despite the US-China trade war, in the first nine months of this year, the country’s total export turnover is estimated to reach $178.91 billion, up 15.4 per cent on-year, with local exporters earning $51.07 billion, up 17.5 per cent, and foreign exporters raking in $127.84 billion (including crude oil exports), up 14.6 per cent. The export turnover of FIEs accounted for 71.5 per cent of total export turnover.
Meanwhile, the total import turnover is estimated at $173.52 billion, up 11.8 per cent on-year, with $69.34 billion from domestic enterprises (up 11.7 per cent) and $104.18 billion from FIEs (up 11.9 per cent).
“In the context of the escalating US-China trade war, Vietnam’s export turnover from the US was $34.9 billion in the first nine months of this year, up 12.5 per cent on-year,” said the General Statistics Office (GSO) director Nguyen Bich Lam. “In this period, Vietnam also earned $28.1 billion from exporting goods to China, up 26.6 per cent on-year.”
For example, locally-owned Hoa Phat Group expected that it will market 2.3 million tonnes of assorted steel this year. In the first eight months of 2018, the company exported nearly 119,000 tonnes. Hoa Phat is now exporting its products to Australia, Cambodia, Malaysia, and the US.
It is expected that in the fourth quarter of 2018, the country’s total export turnover will be $59.09 billion and the total import turnover will be $63.48 billion. This would mean that the economy will see a trade deficit of $4.39 billion.
According to the GSO, the rise in imports is thanks to a climb in domestic production to meet the surging demand for goods until the end of the year. Thus, the trade deficit is a recurring, and means no cause for worry.
Moreover, the local trade and production situation is getting better, because both exports and imports are increasing strongly. The majority of Vietnam’s 31 groups of imported goods are used for production and exportation. Imports of production materials occupy over 90 per cent of the total import mix, about 50 per cent of which are machinery and equipment.
For instance, in the first nine months of 2018, the turnover of many import items used for production increased on-year, such as electronics, computers and spare parts ($31.1 billion, up 14 per cent), mobile phones and spare parts ($11.1 billion, up 2 per cent), cloth (9.4 billion, up 13.5 per cent), steel ($7.6 billion, up 12.2 per cent), plastics ($6.6 billion, up 18.4 per cent), and garment and footwear raw materials ($4.3 billion, up 4.2 per cent).
Besides, the turnover of key export items rose strongly on-year, such as mobile phones and spare parts ($36.1 billion, up 14.6 per cent), garment and textiles ($22.6 billion, up 16.7 per cent), machinery and equipment ($12.1 billion, up 28.7 per cent), and footwear ($11.8 billion, up 10.5 per cent).
High export prices
One of the key contributors to Vietnam’s high export turnover this year is the growing rise in many key exports and the global price of crude oil.
Specifically, according to the MPI, in the first nine months of this year, the prices of 22 groups of export items climbed on-year, such as minerals and ore (up 7.27 per cent), crude oil (21.08 per cent), steel (12.13 per cent), and aquatic products (3.79 per cent).
Last week, the price of Brent and WTI oil rose to $84.75 and $75.11 per barrel, respectively, in London. The price escalation followed US sanctions on Iran and a fear of global supply shortages sparking a debate over the possibility of $100 Brent. It is estimated that an increase of $1 in crude oil exports will bring in about VND1 trillion ($44.25 million) to Vietnam.
Vietnam’s crude oil export turnover fell from $2.93 billion in 2015 to $2.35 billion in 2016. However, the figure bounced slightly back to $2.87 billion last year. In the first seven months of this year, the figure hit $1.26 billion, in addition to $1.1 billion worth of petrol exports.