National Economy Shows Signs of Recovery

The ailing Vietnamese economy, which has been hit hard by the prolonged impact of COVID-19, is showing positive signs of recovery thanks to impressive levels of exports and FDI attraction making a huge contribution to economic growth. Meanwhile, Vietnam’s total import-export turnover is expected to expand by 10% this year to US$600 billion.
October 25, 2021 | 07:57
National Economy Shows Signs of Recovery
Manufacturing mobile phones at a Samsung Vietnam production line. Photo: VOV

Business production moving at full steam

Immediately after the country moved into the post-pandemic period in early October, a number of local garment makers have begun to gather momentum to fulfil orders. Since the beginning of October, Viet Thang Jean Co., Ltd. has exported approximately 150,000 products, a threefold increase compared to the entire month of September, VOV reported.

Pham Van Viet, managing director of Viet Thang, sáid that his company was racing against time in order to meet partners’ orders. Its export turnover is expected to increase by 60% quarter-on-quarter by the end of December, and approximately 8% year-on-year.

According to the executive, Vietnamese garments are enjoying strong sells in the global market, despite the impact of the COVID-19 pandemic. In contrast, China and Bangladesh, both of which are Vietnamese rivals, are encountering several difficulties.

The Vietnam Textile and Apparel Association (VITAS) reports that the country’s total garment and textile export turnover during the opening nine months of the year reached US$29 billion, an annual rise of 13.2%.

The industry’s export value for the year is anticipated to rise to US$37.5 - 38 billion providing that the latest COVID-19 outbreak is brought under control in October, and to US$36 - 36.5 billion if the outbreak remains complicated.

Meanwhile, wood processing businesses have enjoyed impressive growth, despite the impact of COVID-19. Indeed, the export turnover of wood and wood products fetched US$11.11 billion during the past nine months, an annual surge of 30.6%.

National Economy Shows Signs of Recovery
The national economy is showing signs of recovery following a long hiatus caused by COVID-19. Photo: VOV

Since the official implementation of the EU-Vietnam Free Trade Agreement (EVFTA) in August 2020, the local wood industry has expanded its market share to many EU member states, fuelling its export growth.

Vu Quang Huy, CEO of TEKCOM Joint Stock Company, said his firm was hit hard by the impact of COVID-19 in the third quarter of the year, although its overall export value for the entire year is poised to leap by 50%.

He predicts that the global economic recovery moving into 2022 will certainly offer brilliant prospects for the local wood industry to increase its exports.

According to Nguyen Chanh Phuong, general secretary of the Ho Chi Minh City Handicraft and Wood Processing Association, over 60% of businesses have now returned to work, with the figure set to gradually increase to roughly 75% by the end of the year.

The industry is anticipated to rake in US$14.5 - 15 billion from exports this year, or nearly US$3 billion more than last year’s figure. In addition, the increasing global demand for wood and wood products moving into the post-pandemic period will prompt Vietnamese wood export value to rise to US$18 - 19 billion next year, predicts Phuong.

National Economy Shows Signs of Recovery
Workers on a car assembly line at a new automobile plant of VinFast, Vietnam's first homegrown car manufacturer in Haiphong, June 14, 2019. Photo: AFP / Manan Vatsyayana

Bright prospects ahead

The resurgence of the SARS-CoV-2 virus in late April cast a shadow over Vietnamese economic outlook following its successful control of outbreaks in 2020. However, FDI attraction has become a bright spot in the overall gloomy picture for the domestic economy.

The Ministry of Planning and Investment reports that the country attracted US$22.15 billion worth of FDI capital over the opening nine months of the year, an annual increase of 4.4%. Most notably, newly-registered capital surged by 20.6% to US$12.5 billion, while additional registered capital also rose by 25.6% to reach US$6.4 billion.

Dr. Oliver Massmann, general director of Duane Morris LLC, one of the 100 largest law firms globally, notes that the country will soon regain its position as one of the friendliest investment destinations in Asia once the Covid-19 outbreak is fully brought under control over the next six months.

Vietnam is benefiting from bilateral and multilateral free trade agreements, while economic recovery policies introduced by the central government are so far proving to be effective, the expert said.

During a meeting held among FDI businesses in September, Choi Joo-ho, CEO of Samsung Vietnam, also stated that the country remained an attractive destination for foreign investors over the long run.

Choi stated that Samsung supported the Vietnamese Government’s ongoing policy relating to effective pandemic control and economic growth, and believed that the prolonged outbreak would soon be brought under control nationwide, especially in Ho Chi Minh City and other industrial clusters located in the south.

Experts believe that Vietnam will quickly secure positive economic growth in the fourth quarter of the year after suffering a contraction in the third quarter, helping the economy get back on track moving into 2022.

Foreign trade likely to exceed US$600 billion this year

Meanwhile, the Ministry of Industry and Trade has predicted Vietnam’s total import-export turnover is likely to expand by 10% this year to US$600 billion, beating the 4% growth target set previously by the Government.

The Ministry said the country’s foreign trade hit more than US$26 billion in the first half of October, including US$13.16 billion from exports, VOV said.

National Economy Shows Signs of Recovery
FDI capital has enjoyed growth despite the COVID-19 impact. Photo: VOV

Four groups of commodities with an export turnover of US$1 billion or more each were phones and components, computers, electronic products and components, and garment.

Overall, the national total import-export turnover had reached more than US$510 billion from the beginning of the year until Oct. 15. Of the total figure, Vietnam earned US$254 billion from exports and spent US$256.45 billion on imports, resulting in a trade deficit of US$2.45 billion.

The ministry pointed out the monthly trade balance has gradually shifted to a trade deficit since the beginning of the second quarter, and this trend is showing signs of decreasing, with just US$100 million worth of trade deficit recorded in August.

With the current trade growth rate, the import-export turnover for the whole year is expected to exceed US$600 billion, forecast the ministry.

The trade balance will heavily depend on the results of the ongoing fight against Covid-19. The ministry said it would continue to implement a range of solutions to support businesses and promote exports.

To gradually reduce the trade deficit, ministries, sectors and localities focus on measures to keep the pandemic in check, and at the same time remove difficulties for production and circulation of goods.

The fourth quarter of the year is an important period of time when businesses enhance production capacity to meet the yearly target. With the Covid-19 outbreak showing signs of abating, most businesses have resumed production since the beginning of October. If businesses pick up steam again, Vietnam may enjoy a trade surplus this year, the ministry forecast.

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