Vietnam: Exports hit by weakening global demand, hindering economic recovery

Việt Nam’s economic recovery remains challenged with exports being hit hard by weakening global demand, experts said.

HCM CITY — Việt Nam’s economic recovery remains challenged with exports being hit hard by weakening global demand, experts said.

Speaking at a meeting in HCM City on Tuesday, Minister of Industry and Trade Nguyễn Hồng Diên said exports have steadily decreased in most industries, including garments, agriculture, forestry, fishery and wood processing.

“Local exporters have been struggling with weakening global demand as exports fell 11.9 per cent year-on-year in the first quarter, affecting their growth targets in the next five to 10 years,” he said.

Total exports and imports were estimated at $154.3 billion in the first quarter, down 13.3 per cent year-on-year, he added.

Exports of textiles, garments, leather and footwear, timber, and seafood are among the hardest hit with the main export markets being the US and the EU. 

Garment exports fell 8 per cent, handicraft and woodwork exports decreased by about 15 per cent, and seafood exports dropped 27.5 per cent.

Exports to all markets decreased in the period, of which, exports to the US dropped 19.4 per cent; followed by the African market by 11.2 per cent; the EU 9.7 per cent; Asia 7.3 per cent; and Oceania 3.7 per cent, according to Diên.

He attributed the decline to high inflation and the slowing global economy, particularly the risk of economic crisis in some of the country’s major markets, such as the US and the EU.

Exporters are also facing a hike in raw materials for production while export prices remain unchanged, reducing the competitiveness of the products, he said. The cost of labour, packaging, and transportation have also been on the rise, he added.

With Việt Nam signing a number of free trade agreements (FTAs), local exporters are expected to face many technical barriers (such as rules about clean and green energy conversion, low carbon production, and others), he noted.

In addition, many businesses said it was still challenging for them to access loans.

While the central bank has consistently called on banks to cut lending rates to support firms, getting loans disbursed has remained a problem for them, they said.


Nguyễn Hoài Nam, deputy general secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), recommended the Government have a low-interest credit package of VNĐ10 trillion to support farmers and fishermen to buy raw materials to maintain production.

According to Nam, most exporters borrow in USD currency. But the USD loan interest rate has increased to more than 4 per cent per year from 2.1-2.3 per cent per year.

He proposed the USD loan interest rate be reduced to support exporters.

Many textile and garment enterprises are also facing a lack of cash flow and do not have money to pay their employees. 

Trần Như Tùng, vice chairman of the Việt Nam Textile and Apparel Association (VITAS), proposed the Government consider offering a preferential loan package with zero interest rate to support textile and garment businesses to pay wages to employees. 

The Government also needs to reduce corporate income tax by 2 per cent for businesses which meet green standards and support interest rates for green transformation projects.

Nguyễn Đình Tùng, vice chairman of the Việt Nam Fruit and Vegetable Association, said the central bank should consider products such as durian, longan and others.

Early this week, the central bank announced it would restructure loans for struggling enterprises, including rolling them over by up to 12 months, following a demand by the PM.

The central bank last month cut several policy rates to support economic growth. 

Việt Nam is among the world’s most open economies so weak external demand is affecting its economy, experts said.

Industrial production in the first quarter fell 2.3 per cent from a year earlier, while retail sales of goods and services rose 13.9 per cent, according to the figures from the General Statistics Office.

The country’s economic growth slowed to 3.32 per cent in the first quarter compared with 5.92 per cent in the last quarter of last year.

Việt Nam has set a growth target of 6.5 per cent this year, below a decade-high expansion of 8.02 per cent last year. — VNS