Vietnam’s record export surplus

The export of goods is expected to have much prosperity in 2021 if the pandemic is well controlled. Photo: TKTS

Records after records

After four consecutive years of trade surplus, 2020 was the first year Vietnam's import and exports faced a “stormy” time, even unpredictable "turns" before "crossing the finish line" once again.

In the first 11 months of 2020, Vietnam had 31 items with export turnover of more than US$1 billion, accounting for 92% of total export turnover (of which there were six export items with more than US$10 billion, accounting for 64.3%).

In the first 11 months of 2020, the export turnover of the processing industry grew highly compared to the same time in 2019, contributing mainly to the general growth rate with estimated turnover of US$216.35 billion, an increase of 6, 1% over the same period last year. Some items with good growth rates were: computers, electronic products and parts rose by 24.3%; machinery, equipment, tools and spare parts increased by 44.5%; and wood and wood products rose by 14.1%.

During the first half of the year, the Covid-19 pandemic greatly impacted import and export activities. In January 2020 and the first two months of the year, Vietnam had a trade deficit of US$100 million and US$176 million, respectively. From three months to 11 months of 2020, Vietnam had a trade surplus. Notably, the trade surplus figures in the cumulative period was extremely impressive when the next period was higher than the previous one (except for the five-month summary period of 2020), gradually reaching serial records and the next record overtook the previous one.

According to the Ministry of Industry and Trade, by the end of the first quarter in 2020, Vietnam enjoyed a trade surplus of US$2.82 billion, US$1.46 billion higher than the same period in 2019. The trade surplus figures of four months, five months, six months, seven months, eight months and nine months were US$3.04 billion; US$1.88 billion; US$4.03 billion; US$6.5 billion; US$11.9 billion; and US$16.58 billion, respectively. The figure in the final months of the year was even more impressive with record highs of US$18.72 billion in the first 10 months (it was US$9.3 billion in the same period last year) and US$20.16 billion in 11 months of 2020 (it was US$10.8 billion in the same period last year).

Evaluating the results, PhD. Le Quoc Phuong, former deputy director of the Information Center for Industry and Trade (Ministry of Industry and Trade) said Vietnam’s "huge" export surplus was a very positive result during the pandemic. This export surplus was due to a relatively high increase in exports combined with low growth in imports. Vietnam's exports in the first 11 months of 2020 maintained a growth rate of more than 5% and the whole year was expected to increase by more than 5%.

Since the renovation, Vietnam has been a chronic trade deficit economy; the highest year of trade deficit was 2008 with a trade deficit of US$18 billion. The country started to have trade surpluses in 2012. Since then, the country has had a continuous trade surplus (except for 2015, when the trade deficit was US$4 billion). However, Vietnam has never achieved such a large trade surplus like this year.

"Many people were surprised with this result because exports in our neighboring countries have been falling, even as many countries recorded negative export growth," said Phuong.

According to some economic experts, the positive point of trade surplus helps increase foreign exchange reserves. Foreign exchange reserves of Vietnam this year hit a record with US$100 billion. The trade surplus is an important macroeconomic indicator to evaluate the "health" of the economy because only a healthy economy can have a trade surplus. Thanks to a high level of foreign exchange reserves and high trade surplus, Vietnam has kept the exchange rate stable.

Many expectations in 2021

Closing 2020 with many memories of imports-exports and discussing with experts and enterprises about the prospects for 2021, they all said Vietnam's export prospects would depend on the prospects of the world economy in controlling the pandemic.

Phuong said: “In recent days, controlling the pandemic has many positive signals when the vaccine has been launched for mass injection in several countries. It is forecasted the export of goods in 2021 will be better than in 2020 with higher export growths if the pandemic is well controlled all over the world. The effective Regional Comprehensive Economic Partnership (RCEP) combined with the new-generation FTAs will work well for exports and it will be more effective if opportunities are utilised.”

Talking to Customs News, Minister of Industry and Trade Tran Tuan Anh said the world environment had many unpredictable and unpredictable factors. Amid trade protection, trade war and natural disasters, 2021 and beyond will still face many difficulties and complications for international trade activities, especially in developing countries.

However, 2021 and the coming years will also have favourable conditions from the integration strategies, the framework of signed and to be signed free trade agreements (FTAs); policies of the Government, the Party, the State and the Government's decisions on a range of economic restructuring, social security policies, reform and integration policies, as well as efforts to improve legal institutions.

“I believe that 2021 and the following years will witness the growth and even acceleration of Vietnam, including international integration and import-export aspects. We have built up and approved targets with specific scenarios for 2021, basically maintaining the general trend in socio-economic development as well as international trade,” stated Tran Tuan Anh.

According to the resolution on the socio-economic development plan for 2021, the overall hope is to effectively implement the goal of both preventing and combating the pandemic, protecting people's health, and developing socio-economic factors on the basis of maintaining macroeconomic stability, controlling inflation and ensuring major balances. The National Assembly proposed the Government synchronously and effectively implement solutions to promote exports and strongly develop the domestic market; in which stimulating consumer demand, developing the domestic distribution system and promoting trade promotion; to expand and diversify the import-export market, avoiding being overly dependent on any market; to take advantage of opportunities from the FTAs, especially the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam- FTA (EVFTA).