Vietnam's Trade Surplus with EU and US Markets Reaches $125 Billion

DNHN - The trade of goods between Vietnam and the markets in Europe and America had a notable downturn in 2023. It is anticipated that the total value of products imported and exported will be $208 billion, a 9.5% decline from 2022.

Research released by the Ministry of Industry and Trade projects that exports to the US and EU markets in 2023 will only amount to approximately $166 billion, a 9.6% decline, as a result of numerous adverse effects arising from the global economy. In the meantime, imports are expected to be around $41 billion, which is a 9.1% decrease from 2022.

Vietnam is predicted to have a $125 billion trade surplus with the US and EU markets, with a surplus of roughly $33 billion with European nations and $92 billion with American nations, notwithstanding these losses.

Director of the European-American Market Department, Mr Ta Hoang Linh, gave the following explanation for the drop in trade with these two important markets: "With a highly open economy, Vietnam's import and export activities are directly affected by the global economic downturn in the first half of 2023 and the slow and uneven recovery of economies worldwide in the second half of 2023."

The majority of the world's most powerful economies—the US at 2.1%, Canada at 1.3%, the EU at 0.7%, the UK at 0.5%, Russia at 2.2%, and so on—are expected to see GDP growth rates below 2.5%, according to the International Monetary Fund (IMF), with the notable exceptions of Mexico (expected to grow by 3.2%) and Brazil (projected to grow by 3.1%).

In comparison with the same period the previous year, there is less demand for imported goods in Vietnam's major export markets. Based on data from these nations, the EU decreased its imports from non-EU markets by almost 16% in the first ten months of 2023, while the US decreased its imports from the rest of the world by 6%. Even if inflation has decreased, it is still quite high. This has significantly changed consumer behaviour and habits in European and American countries, along with geopolitical difficulties, making it harder to maintain export markets.

The export turnover with several important markets has dropped precipitously for the first time in many years of consistently high growth. Interestingly, exports to the US are predicted to come in at $96.9 billion, down 12.4% from 2022. Estimated exports to the EU will be $43.7 billion, a 6.7% decrease. The anticipated amount for the Americas' participating countries in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is $13.1 billion, indicating a 10.6% decrease. Export growth was 3.1%, 12.7%, and 10%, respectively, for the UK, nations in the Eurasian Economic Union (EAEU), countries in the Southern Common Market (Mercosur), and a few smaller markets.

The main exports from Vietnam to these markets, including wood and wood products, textiles and garments, leather, footwear, and handbags, phones, computers, and components; machinery, equipment, spare parts, and accessories; and seafood, have all seen average decreases of more than 10% from 2022.

Nonetheless, exports of a few other goods have increased, such as various kinds of iron and steel (up 23.5%) and cameras, camcorders, and their components (up 27%). Notably, a few agricultural items have also grown: cashew nuts have increased by 10.2%, fruits and vegetables have increased by 10.2%, and rice has increased by 53.3%.

Many organisations forecast that the global European and American economies will develop at a slower rate in 2024 than they did in 2023.

In particular, the IMF predicts that the rate of growth in the global GDP in 2024 will be 2.9%, down from 3% in 2023. Compared to 2023, the GDP growth rates of the main American and European economies are predicted to either stagnate or expand very little in 2024. For example, growth in the US is expected to be 1.5%, but growth in the Eurozone is expected to be 1.2%, compared to 0.7% in 2023, and growth in the UK is expected to be 0.6%, compared to 0.5% in 2023.

Furthermore, there are worries about protracted geopolitical conflicts and instability that can disperse to other areas.

Even while big export markets in the United States and Europe are probably going to grow more slowly in the upcoming year, they are still very important markets for Vietnam's exports.

Positively, Vietnam is one of the top 20 nations in the world in terms of trade volume and is essential to the global supply chain. Vietnam will therefore continue to benefit from and be able to preserve its advantages in trade and investment activities in 2024 thanks to the successful implementation of free trade agreements (FTAs) with market partners in Europe and America, including the EVFTA, CPTPP, and UKFTA, even in the face of a slowdown in trade.

Vietnam has made the most use of the CPTPP to speed up its exports of goods to Canada, according to Ms Tran Thu Quynh, Trade Counsellor at the Vietnam Trade Office in Canada. It is projected that by 2023, exports to Canada will amount to more than $5.7 billion.

Mr Ta Hoang Linh stated that the European-American Market Department (Ministry of Industry and Trade) will keep a close eye on the market, promptly gather information on regional and global economic, political, and policy developments that may affect trade with Vietnam, and issue timely warnings to the business community and advise the government on appropriate policy responses due to the inherent risks associated with trade.

PV