How Vietnam’s exports weathered global storm

Exports were up 18.2% year-on-year in the first eight months to over US$252 billion, with August shipments rising to a five-month high thanks to recovery in smartphones, computers and garments.

The rise is partly attributed to a shift in orders from China to Vietnam as the former pursues a strict Covid-19 policy and an electricity shortage in its southwestern region has affected manufacturing there, according to securities brokerage VNDirect.

Another reason is the contribution of foreign-invested companies, lender HSBC said.

Vietnam, along with Singapore and Malaysia, has been climbing up the value chain in recent years thanks to its unrelenting efforts to increase manufacturing capacity.

Agriculture and fisheries have also helped sustain exports despite tightened spending being seen in major markets such as the U.S. and Europe.

Tuna exports to the U.S. and the E.U. rose by 65% and 70% year-on-year in August.

The belt-tightening in these markets is increasing demand for canned tuna as a favored source of protein, the Vietnam Association of Seafood Exporters and Producers said.

Rice exports rose by 8.1% to over $2.3 billion.

But there are challenges on the horizon.

Inflation in the U.S. is still at a decades-high level, demand is weakening in China and Europe is going through an energy crisis.

“We cannot keep thinking that exports must rise year after year,” economist Le Dang Doanh told a recent forum.

The International Monetary Fund has adjusted its global growth forecast downward five times this year, indicating how unstable the world economy is, he said.

Vietnam, though still one of the fastest growing economies in the world, could not be complacent, at least for now, he added.

HSBC also said there are signs that demand for electronics is declining, a threat to Vietnam’s exports.

VNDirect analysts forecast Vietnam’s export growth to slow down in the fourth quarter due to the falling global demand for its goods.