Exhausted second quarter, exports look forward to the second half of the year

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Import and export goods at HaiPhong port area. Photo: T. Binh

Bright spots in domestic businesses

According to the latest information from the Ministry of Industry and Trade, the export turnover in April was estimated at US$19.7 billion, a sharp decrease of 18.4% compared to March and 3.5% compared to the same period last year. In the first four months of the year, the export turnover was estimated at US$82.94 billion, up 4.7% over the same period in 2019 (increasing by 6.5% in the same period).

From a commodity perspective, in the past four months, while exports of processed goods increased by 6.1%, the export turnover of agricultural, fishery and mineral fuels groups decreased by 5.4% and 15.4%, respectively.

Regarding the import-export balance, in April, Vietnam's trade deficit was estimated at US$700 million. However, in the first four months of the year, the trade balance continued to achieve a trade surplus of US$3.04 billion, much higher than the surplus of US$983 million in the first four months of 2019.In particular, FDI enterprises had a trade surplus of US$10.17 billion; and domestic enterprises saw a trade deficit of US$7.13 billion.

The Ministry of Industry and Trade stated Vietnam's trade activity in April began to be strongly affected by the Covid-19 pandemic.

Notably, negative effects of the Covid-19 pandemic are forecasted to have a clearer impact on Vietnam's trade activities during the second quarter of 2020 because the disease has seriously affected the major trading partners of Vietnam, including the US, the EU and Japan since mid-March.

Talking to a CustomsNews reporter, economist Le Quoc Phuong said, although Vietnam has had a trade surplus since the beginning of the year, it was not due to a sharp increase in exports, but because of declining imports and interruptions due to the pandemic. The trade surplus was not praiseworthy in this context.

However, one of the outstanding points in the "picture" of imports and exports mentioned by this expert was the rise of domestic businesses. The export growth of domestic enterprises has been continuously positive since 2018.

In fact, data from the Ministry of Industry and Trade showed that in the total export turnover of US$82.94 billion in the first four months of this year, the export turnover of domestic enterprises remained at a double-digit growth rate, up 12.1% over the same period in 2019, estimated at US$26.45 billion.Meanwhile, the FDI sector (including crude oil) was estimated at US$56.49 billion, up 1.5% compared to the same period in 2019only.

Looking forward to the second half of the year

According to the Ministry of Industry and Trade, if the pandemic is controlled in the second quarter of 2020, exports are expected to increase again in the second half of the year and continue to be the main growth motivation of Vietnam's economy in 2020.

Typical export support factors mentioned are that the Covid-19 pandemic has been controlled well in China and South Korea; and other countries have tried to control the disease. Therefore, the demand is forecasted to gradually increase again.

Besides, many countries gradually reopened their economy in the context of continuing to fight the Covid-19 pandemic. Specifically, Italy is going to allow the manufacturing industry to resume operations from May 4 in a plan to end the blockade and open schools in September.

Belgium also announced plans to reopen businesses and schools in mid-May and reopen restaurants from June 8. India, Iran and Israel restarted businesses in areas at low risk of Covid-19 outbreaks. The governments of Australia and New Zealand are simultaneously preparing to gradually open the economy and some localities, and carefully loosen the blockade.

The Ministry of Industry and Trade has placed great hopes on the Vietnam-EU Free Trade Agreement (EVFTA). The EVFTA coming into force in the second half of 2020 is expected to offer an opportunity to boost Vietnam's exports of goods to the EU in the last months of this year and the coming years.

Under this agreement, up to 70% of goods are eligible for tariff reduction and the EU will eliminate import duties on 99.7% of tariff lines. This is a great advantage for Vietnam's exports.

Regarding the recovery of goods export, talking to the CustomsNews reporter, trade expert Pham Tat Thangsaid:"In case the Covid-19 pandemicis controlled in the second quarter, even though the second quarter exports is exhausted, if Vietnam makes good use of the EVFTA, it can compensate for the previous losses and "achieve the target" (export growth in 2020 is from seven to eight% compared to 2019).

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Generally for the first four months of this year, the US remained the Vietnam's largest export market with a turnover of US$20.25 billion, up 13.4% over the same period last year; followed by China with US$13,125 billion, up by 26.7%; the EU market reached US$10.75 billion, down 8.1%; ASEAN market reached US$8.2 billion, down 3.2%; Japan reached US$6.74 billion, up 10.1%; and South Korea reached US$6.23 billion, down 0.2%.