Foreign trade expected to prosper in second half of 2021

06:00 | 03/08/2021 Trade

(VEN) - Conditions are favorable for Vietnam to boost foreign trade in the second half of 2021 and achieve the target set for the whole year, especially for sectors with export value amounting to tens of billions of US dollars. 

Strong growth

According to the Ministry of Industry and Trade (MoIT), export value reached an estimated US$26.5 billion in June, up 1.2 percent compared with May. In the first six months, total export value reached an estimated US$157.63 billion, a year-on-year increase of 28.4 percent. The export value of 25 products exceeded US$1 billion each, of which five exceeded US$10 billion.

foreign trade expected to prosper in second half of 2021
Import, export activities have flourished despite the impact of Covid-19

Tran Thanh Hai, Deputy Director of the MoIT’s Agency of Foreign Trade, said the double-digit export growth was an impressive achievement in the context of Covid-19’s heavy impact on the global economy.

Imports also grew strongly in the first six months due to the expansion of domestic production. The import value reached an estimated US$27.5 billion in June, down 2.7 percent compared with May. In the first half of the year, however, the import value increased 36.1 percent year-on-year, reaching an estimated US$159.1 billion.

Tran Thanh Hai believes the increased import of production materials in the first half of 2021 promises good export results for the rest of the year.

Dr. Le Quoc Phuong, former Deputy Director of the Vietnam Industry and Trade Information Center under the MoIT, said Vietnam faced a trade deficit in the first half of 2021. But in his opinion, the deficit was modest and did not present a major problem because Vietnam is promoting industrialization and modernization and has high import demand.

Moreover, he added, the Vietnamese economy still depends on manufacturing and assembly of orders by foreign firms and therefore has high demand for material and component imports. Consumer goods account for a small percentage of the total import value, although the import of consumer goods has grown strongly.

Further growth expected

There are favorable conditions for Vietnam to boost foreign trade, especially for sectors with high export value. Many countries are promoting Covid-19 vaccinations and loosening social distancing measures, leading to increased demand for Vietnamese textiles, garments, leather, footwear and wood products. Meanwhile, some economies continue to deploy demand stimulus packages and provide direct support for their people, promoting the consumption of goods, including products imported from Vietnam.

However, Vietnamese goods have faced rising protectionism since 2018 and the number of trade remedy-related lawsuits against Vietnamese exports is on the rise.

The representative of the MoIT also mentioned continuous increases in international maritime transport costs since April 2020. Specifically, the cost of shipping in Asia and Africa has increased by three to four times; in Europe, by five to six times or even seven to eight times. Meanwhile, container shortages remain a problem.

According to the MoIT forecast, 2021 export value will reach about US$308 billion, up nine percent compared with 2020; import value will reach about US$306 billion, up 16.5 percent; and the trade surplus will come in at about US$2 billion.

Tran Thanh Hai said that export promotion efforts should coincide with maintaining macroeconomic stability and trade balance.

Along with boosting exports, economists share the opinion that Vietnam should effectively manage imports through rules of origin, tax evasion prevention measures, and developing support industries to reduce reliance on imports. The MoIT is building a strategy to boost foreign trade in the 2021-2030 period and will submit it to the government for approval in the near future. The strategy will consist of sustainable export orientations.

Phuong Lan