WHAT CHALLENGES DO EXPORTS FACE IN THE SECOND HALF OF 2023?
04 July 2023
Exports have recovered 87.9% over the same period
The report of the Ministry of Industry and Trade shows that, in terms of exports, basic export turnover kept its momentum and after 6 months was estimated at 164.45 billion USD, recovered 87.9% over the same period in 2022.
In the first 6 months of the year, the rate of reduction in export turnover of the domestic economic sector (down 11.9% over the same period last year) was slower than that of the FDI sector (down 12.2% over the same period last year), showing the efforts of domestic enterprises in recovering production, Business in difficult conditions.
It can be clearly seen that the export of vegetables and rice was the bright spot in the country’s exports in the first 6 months of the year when it achieved a double-digit increase. In particular, rice export turnover increased by 34.7% over the same period last year (rice export volume increased by 22.2% over the same period last year); Fruit and vegetable exports increased by 64.2% over the same period last year.
Rice exports are a bright spot in the commodity export picture in the first half of 2023
Rice was one of the bright spots in the export picture in the first half of this year. According to the Vietnam Food Association, the price of many types of rice in Vietnam still remains higher than Thailand and India. Specifically, the price of 5% broken rice of Vietnam in the first weeks of June 2023 reached about 498 USD / ton, while the price of rice of Thailand and India is 492 USD / ton and 453 USD / ton respectively. Vietnam’s 25% broken rice also recorded a price of 478 USD / ton, about 10 USD / ton higher than Thailand, about 50 USD / ton higher than India.
On the business side, Mr. Pham Thai Binh, General Director of Trung An High-tech Agriculture Joint Stock Company, said that General Director of Trung An High-tech Agriculture Joint Stock Company said that in April, the Company also won the bid to export 11,347 tons of long-grain brown rice to the Korean market at quite good prices, nearly 600 USD/ton. Since the beginning of the year, the company has exported more than 5,000 tons of rice to the European market; about 32,000 tons of rice to South Korea; In addition, it also exports to markets such as the Middle East, Malaysia, China…
Notably, the company is not only exporting rice but also expanding the export of deeply processed rice products such as noodles, pho, vermicelli … into the US and European markets. This is a very high-value segment, because if processed rice has a price of nearly 700 USD / ton, the value of processed products can raise the value of 1 ton of that rice up to 2,500-3,000 USD.
Up to 27 items achieved export turnover of over 1 billion USD (down 02 items over the same period), accounting for 90.1% of total export turnover (there were 5 export items over 10 billion USD, accounting for 57.8%).
Notably, some export markets recovered positively to near the same period last year such as India (95.7%), Japan (96.7%), China (97.8%). Some new markets recorded high growth such as Arhentina (up 35% over the same period), Saudi Arabia (up 67%), Angeri (up 91%).
However, in addition to those rare bright spots, in general, exports continue to face many difficulties when export turnover in the first 6 months of the year decreased by 12.1% over the same period in the context of slow global trade growth when exports of goods to key markets decreased compared to the same period last year, such as: exports to the US market decreased by 22.6%, the EU decreased by 10.1%; China fell 2.2%; South Korea fell 10.2%; Japan fell 3.3%; ASEAN decreased by 8.7%…
In addition, the export turnover of most items in the group of processing and manufacturing industries decreased, including key export items such as: textiles and garments decreased by 15.3%; footwear of all kinds decreased by 15.2%; phones and components decreased by 17.9%; wood and wood products decreased by 28.8%, fertilizers of all kinds decreased by 45.6% …
“Some export sectors such as seafood, wood and wood products, iron and steel, plastic products continue to face pressure on trade remedy investigations, which have created difficulties in the export market over the past time. Some agricultural products are still too reliant on the form of exchange of residents and small quotas, so there is always a potential risk of congestion at the border gate, affecting cross-border trade,” the report stated.
Import turnover decreased in almost all commodity groups
Regarding imports, according to the Ministry of Industry and Trade, basic imported goods are well controlled when imports of goods for production for export and essential goods account for 88.1%; Imports of goods to be controlled accounted for only 6.2% and other goods accounted for 5.7%.
Import turnover in the first 6 months decreased by 18.2% over the same period due to difficulties in export orders, world demand decreased, so the demand for importing raw materials for production for export decreased. Import turnover of goods that need to be restricted from imports decreased by 13% over the same period last year, estimated at 9.4 billion USD.
Import turnover of key products decreased such as: computers, electronic products and components was estimated at 38.27 billion USD, down 11.4% over the same period last year; machinery, equipment, tools and spare parts decreased by 12.3%, reaching 19.7 billion USD; fabrics of all kinds decreased by 19.2%, reaching 6.4 billion USD; steel of all kinds decreased by 32.3%; gasoline of all kinds decreased by 18.4%; rubber of all kinds decreased by 41.2%; cotton of all kinds decreased by 21.5%; chemicals decreased by 24.2%; fertilizer decreased by 28.1%… Especially, the import turnover of phones and components continued to decline sharply when it reached only 3.45 billion USD, down 66.5%.
Regarding the import market of goods in the first 6 months of 2023, due to difficulties in production and export, Vietnam’s import turnover of goods from most markets decreased compared to the same period last year. In particular, China is still the largest import market of Vietnam with an estimated turnover of 50.09 billion USD, down 18.7% over the same period last year; followed by South Korea, estimated at 24.2 billion USD, down 25.6%; ASEAN market is estimated at 20.3 billion USD, down 16.9%; Japan reached 9.8 billion USD, down 18.7%; EU reached 7.06 billion USD, down 10.7%; The United States reached $7 billion, down 7.3%.
Thus, the trade balance continued to maintain a high trade surplus, reaching 12.25 billion USD (the same period last year had a trade surplus of 1.16 billion USD), contributing to ensuring the balance of payments and supporting exchange rate management. In which, the domestic economic sector has a trade deficit of 9.81 billion USD; the foreign-invested sector (including crude oil) had a trade surplus of 22.06 billion USD.
What will be the second half of the year?
In addition, the fact that industrialized countries continue to promote strategies to diversify supply sources, diversify supply chains, diversify investment (China 1) will help Vietnam become an important production and export center in the global value chain.
Industry and Trade strives for export turnover to increase by about 6%, maintaining export surplus.
Vietnam’s increasing role in ASEAN along with the fact that this region is the focus of influence of major market countries and also one of the regions that still maintains growth and internal economic strength, making ASEAN an increasingly important market in foreign and economic policies of countries: EU develops Indo-Pacific strategy; The US promotes IPEF negotiations, the UK successfully negotiates to join the CPTPP … will also facilitate Vietnam’s investment and production and export activities in the coming time.
In particular, existing FTAs with Vietnam’s major market partners such as the European and American markets continue to have positive impacts on trade, investment and especially Vietnam’s exports. Some garments began to enjoy 0% import tax on the EU market under the EVFTA agreement… will be favorable conditions for businesses to boost exports to these markets.
However, the instability and uncertainty of the global economy is at the highest level in many years, affecting macroeconomic stability and growth prospects of Vietnam in the coming time when our country is an economy with great openness, in the coming time will also significantly depend on the ability to diversify export markets, In association with taking advantage of opportunities from FTAs and dealing with risks associated with trade and technology competition between major countries, international policies have a strong impact on industries and fields such as the application of global minimum corporate tax, EU regulations on the import of forest-related agricultural products, etc fishing products…
In the coming time, the Ministry of Industry and Trade will determine to continue promoting exports, creating new orders to consume output products, promoting production for enterprises such as supporting enterprises to take advantage of commitments in FTA agreements, especially CPTPP, EVFTA, etc UKVFTA to promote exports, through guidance on the application of rules of origin, issuance of preferential Certificates of Origin to exploit opportunities from the agreements.
In addition, step up negotiations and sign new trade agreements, commitments and links to diversify markets, products and supply chains. Expanding export markets for Vietnamese goods through trade promotion work, overseas Vietnam Trade Office, e-commerce development. The connection organization helps domestic enterprises participate in the supply chains of FDI enterprises, especially large global enterprises, to participate in overseas distribution systems.
In 2023, despite many difficulties, the Industry and Trade industry strives for export turnover to increase by about 6%, maintaining export surplus.
Sources: congthuong.vn