The second quarter of export turnover will determine the target for the whole year 2023

DNHN - The country's export turnover decreased by 11.9% in the first quarter compared to the same period last year, with many major export products such as seafood, textiles, footwear, and furniture experiencing significant declines.

The first quarter suffered from a dearth of orders.

According to the General Statistics Office, the export turnover of products in the first quarter was estimated at 79.17 billion USD (down 11.9% compared to the same period last year). The domestic economic sector reached 19,26 billion USD, a decrease of 17.4%, representing 24.3% of total export turnover; the FDI sector (including crude oil) reached 59.91 billion USD, a decrease of 10%, representing 75.7%.

During the first three months of this year, crucial export industries experienced negative growth. Consequently, seafood sales totaled $1.85 billion, a 27% decrease from the same period last year. The principal seafood exports, including prawns (down 40%), pangasius (down 32%), and tuna (down 31%), all experienced a precipitous decline...

Similarly, timber and wood products experienced a decrease of 28.3% compared to the same period last year, when they generated only $2.88 billion in revenue. Two other export sectors, textiles, apparel, and footwear, generated $2.88 billion in revenue during the first quarter. Textiles and apparel only brought in $7.2 billion, a decrease of 17.4% over the same period, and leather and footwear reached $4.3 billion, a decrease of 18.0%.

Regarding the export market, Vietnam's exports to the majority of its main trading partners decreased in the first quarter. With a turnover of USD 20.57 billion, the United States is Vietnam's largest export market, accounting for 26% of total export turnover and a decline of 21.6% compared to the same period last year. China follows with 11,54 billion USD, a decrease of 13.8%; the EU reached 10,37 billion USD, a decrease of 10.0%...

The Ministry of Industry and Trade identified several fundamental causes for the decline in exports of a variety of commodities. Consequently, the price of input petroleum and global energy remains high, influencing the production costs of domestic businesses.

Another factor is that inflation is still high and monetary policy has not been loosened; the slow recovery of the global economy and the collapse of some global banks have had certain effects on the trend of tightening spending on common and luxury products in some major markets, such as the United States and the European Union, thereby reducing import demand. The reopening of China also exerts competitive pressure on Vietnam's exports of similar products.

In addition to external factors, domestic businesses are experiencing difficulty gaining access to capital, as bank interest rates and input costs remain elevated. Particularly, businesses in the processing and manufacturing sectors are experiencing a severe lack of orders, and their capacity to assimilate capital has begun to diminish.

In the first quarter, the absence of orders is the greatest concern for many businesses. To maintain production and retain employees until the situation improves in the upcoming months, businesses must utilize all available resources.

Optimism for the second quarter

Mr. Pham Xuan Hong, chairman of the Ho Chi Minh City Textile and Garment Embroidery Association, disclosed to the DTTC that despite difficulties, businesses have received an increase in orders. If the number of orders placed by businesses in the first quarter decreased by 30 to 40 percent compared to the same period the previous year, the number of orders placed by businesses in the second quarter increased by only about 20 percent, while a few businesses had orders equal to about 90 percent of what they received the previous year.

According to Mr. Hong, after a lengthy period of spending reductions, the demand for fashion products such as textiles and footwear is progressively exhibiting indications of recovery in many countries.

Nonetheless, businesses are making consistent efforts to participate in trade promotion activities to access new markets, so there are numerous reasons to believe that the situation will improve by the end of the second quarter.

Particularly, businesses anticipate the textile industry to flourish following the textile industry's international exhibition in early April. This is the industry's greatest international exhibition since 1991, with more than three times as many exhibitors as in 2022. The event attracts an active trade market for the industry. Textile, domestic and international opportunities for commercial cooperation.

Ms. Le Hang, director of communications for the Vietnam Association of Seafood Exporters and Producers (VASEP), stated that seafood exports could recover gradually beginning in the second quarter of this year, after holding international trade fairs in the United States and the European Union to attract more customers to Vietnam.

In the seafood industry, pangasius will improve as a result of inflation, the economic downturn in many markets, and the increased availability of excellent opportunities following China's full reopening after Covid-19.

Regarding the market, China will become the greatest import market, but the competitive pressure is intense because exporters and merchants from other nations are also focused on this market. Exports to the European Union, United States, Japan, and South Korea are hampered by inflation, which causes consumers to restrict their spending and the average import price to decrease compared to the previous year.

According to the Ministry of Industry and Trade's general assessment of the situation shortly, there are still many obstacles, but there are also promising indications. Some of the world's largest economies, such as China and the United States, grew quicker than anticipated; some of Asia's emerging economies, such as India and ASEAN, have positive growth. Although the industrial production index decreased, the trend has progressively increased over the past few months; The import of raw materials and auxiliary materials shows signs of growth... are indicators that the production, import, and export situation will improve shortly.

The Ministry of Industry and Trade will assist businesses in expanding and diversifying their export markets, focusing on new and potential markets such as India, Africa, the Middle East and Latin America, Eastern Europe, etc., and promoting the effective use of free trade agreements.

In its report on the state of enterprises during the first quarter, the Ho Chi Minh City Business Association urged the State Bank to find a way to restructure debts, maintain the integrity of businesses' debt groups, and assist businesses in overcoming the difficult period. In particular, continue implementing the loan extension policy for medium and long-term loans in 2023. Particularly, apply a one-year grace period as opposed to compounding the repayment the following year, as the support did in 2021.

In addition to the positive signal of order returns, the elimination of internal constraints such as capital and interest rates will serve as a second propelling force for the recovery of export industries.

P.V (TH)