Vietnam’s export growth increased 5.3% year-on-year to US$58.86 billion in the first quarter, the lowest level in 10 years, but exports are projected to pick up as advanced economies and China introduce stimulus measures, according to Viet Dragon Securities Company (VDSC).
According to VDSC, export value to China and Europe declined and export growth to South Korea and Japan sharply decelerated. Exports to the US on the other hand increased dramatically by 28.8% year-on-year due to the US-China trade friction.
Vietnamese furniture, machinery, equipment, and phone exports to the US skyrocketed in the first quarter. As a result, Vietnam recorded a trade surplus of USD10.3 billion with the US, up 34.5% year-on-year.
At the same time, imports from China to Vietnam rose sharply. This can be partly explained by Vietnamese traders importing Chinese products to export to the US, avoiding higher tariffs, suggested VDSC.
Overall, Vietnam’s trade deficit with China in the first quarter reached US$8.6 billion, an increase of nearly 58.9% year-on-year.
Although phone exports to the US soared 87.2% year-on-year, exports of those same products to China plummeted in the first quarter, down 64.7% year-on-year as its smartphone market shows signs of saturation and Samsung continues to lose market share in the world’s second largest economy. The total export value from this product category decreased 3.6% year-on-year in the first quarter of 2019.
Agricultural export value decreased 11% year-on-year due to price pressure on products such as rice and coffee. The export price of rice, Vietnam’s main agricultural export product declined 13.4%.
FDI import growth fell sharply (4.7% year-on-year compared to 15.1% in the same period last year). Meanwhile imports by domestic enterprises rose due to an increase in crude oil imports (a 20-fold increase year-on-year) to serve Nghi Son refinery and big projects like VinFast’s car factory. Vietnam imports mostly machinery and equipment (investment goods).
Import of consumer goods increased the most but accounted for only 8% of the total imports. Automobile imports grew 6.5-fold year-on-year given unusual low imports in the first quarter of 2018 due to regulatory hurdles. Coal imports increased 88% year-on-year due to high demand from thermal power plants; This trend will probably continue in the next quarters, VDSC predicted.
