Vietnam’s exports to both the United States and the European Union are expected to face a number of hurdles as a result of the negative impact of the novel coronavirus pandemic (COVID-19), according to the General Statistics Office (GSO).
The first quarter of the year saw the country’s exports increase by just 0.5% to US$59.08 billion, while imports declined by 1.9% to US$56.26 billion.
As a result, Vietnam enjoyed a trade surplus of US$2.8 billion in the reviewed period, US$1.3 billion more than the corresponding figure last year. Economists consider this figure is to be acceptable in the context of the serious economic consequences of the COVID-19 epidemic.
Despite this, there are gloomy projections ahead for exports in the second quarter, especially exports to two of the country’s major markets, the US and the EU.
Bui Trong Tu, Deputy Director of the GSO’s Department of Trade and Services Statistics, said almost all of the export orders received by domestic enterprises from the two markets have been temporarily suspended. If complications regarding the COVID-19 epidemic remain during the second quarter of the year, it is expected to significantly impact the country’s exports of its key items such as textiles, footwear, and seafood to these markets.
Recent weeks have seen several major importers from the US and EU request local textile, garment, and footwear exporters temporarily halt deliveries, whilst no new contracts are being signed.
The number of textile and footwear export orders to the US and EU markets in April and May is projected to plummet, in addition to no new orders from June onwards being negotiated.
According to wood processors involved in exports, a number of businesses could be forced to reduce their capacity by 70% if the epidemic shows no signs of abating in April, while many companies will have to halt production to reflect the drop in export orders if the epidemic remains challenging in the second quarter of the year.
With regard to the electronics industry, according to a report released by Samsung Electronics Vietnam, both the US and EU markets account for over 50% of the export value of their products. In addition, Samsung Electronics' global sales for this year are forecast to decline with the company’s export target being adjusted to approximately US$45.5 billion in contrast to the US$51.38 billion seen last year.
Elsewhere, the shift in terms of exports of key commodities to other markets such as India, the Republic Korea, and Japan are projected to face a number of different hurdles.
Most notably, the country’s textile and footwear exports to the three markets will face stiff competition from similar items made in China due to their huge production capacity and their gradual recovery following the pandemic
The recovery of export growth is largely dependent on whether or not the US and the EU are able to contain the COVID-19, with local businesses keen to take advantage of the opportunities brought about by the EU-Vietnam Free Trade Agreement (EVFTA), which will be ratified by the National Assembly and take effect later this year.
VOV
