Weak economic growth and US-China tensions are causing a negative impact on global trade. In Asia, however, Vietnam remains a bright spot with positive export expansion while most other Asian countries suffered contractions in recent months, according to Viet Dragon Securities Company (VDSC).
Key regions’ export growth are in the downtrend for the last 12 months. According to International Monetary Fund (IMF), there are three interrelated production hubs, including the US, Germany and China. China’s export revenue dropped 2.7% year-on-year in April while Germany and the US recorded modest expansion of 3.1% and 1.3% year-on-year, respectively.
Business confidence remain fragile if not gloomy. IHS Markit’s data shows the US manufacturing index gradually declined to 50.8 points while that of the EU was under the 50 thresholds, indicating shrinking manufacturing activity. The US business confidence index reached its lowest point since June 2012. Meanwhile in the EU, there was a clear drop in optimism with the smallest gain in employment numbers since September 2016.
Looking at trade between the US and the rest of the world, there has been a slowdown compared to last year, except ASEAN.
East Asian export revenue to the US fell 6% year-on-year in the first quarter of 2019, while Western European exports grew 5%, a third of the figure recorded in the same period of last year.
In contrast, ASEAN exports to the US rose 13% year-on-year, the highest since 2012. Excluding Vietnam, however, growth was just 2.8% year-on-year. Vietnamese telephone and accessories exports soared, driven by Samsung that conquered 23.2% market share in the US, according to Canalys, a global technology market analyst firm.
Vietnamese textiles, papers, iron and steel, wood and related products, seafood and preparared food exports to the US recorded two-digit growth. In the first quarter of 2019, total Vietnamese exports to the US grew 40% year-on-year.
Vietnam is labeled as a beneficiary of the Sino - American trade war and hot spot for Asian manufacturers. That said, an escalation of the trade conflict will hurt every country, including Vietnam. At the moment, export growth is lower than import growth in Vietnam, potentially worsening the trade balance in the country.
In May, Vietnam reported an estimated trade deficit of US$1.3 billion, leading to a deficit of US$548 million in the five month period while the country had an accumulative surplus of US$752 million one month earlier, stated General Statistics Office (GSO) in a monthly report.
