General

Import and export data shows that Vietnam's economy is facing various unfavorable factors. The combination of shrinking exports and frequent power outages has raised concerns about the prospects of this emerging Southeast Asian manufacturing center.

The Vietnamese economy is facing various unfavorable factors. The combination of shrinking exports and frequent power outages has raised concerns about the prospects of this emerging Southeast Asian manufacturing center.

Nihon Keizai Shimbun reported that as one of the fastest growing economies in Asia in recent years, Vietnam's gross domestic product (GDP) grew by 8% in 2022. Many multinational enterprises invested in Vietnam, even using it as an alternative production base for China. The local consumer market in Vietnam is also constantly growing.

But recent data suggests that Vietnam's economy is slowing down. According to the import and export data of the National Bureau of Statistics, from January to May, Vietnam's exports decreased by 11.6% compared to the same period last year, imports decreased by 17.9%, and the manufacturing industry decreased by 2.5%. Import and export data shows that in the first quarter of 2023, Vietnam's GDP growth slowed to 3.3%, lower than the 5.9% in the fourth quarter of 2022.

Several economists have lowered their economic growth expectations for Vietnam. Standard Chartered Bank has lowered its GDP growth forecast for Vietnam this year from 7.2% to 6.5%. The Oxford Institute of Economics previously predicted that Vietnam's economic growth this year would be 4.2%, but import and export data shows that it has now been lowered to 3.0%.

The demand for Vietnamese products from European and North American customers has also shown a downward trend. After the closure of the COVID-19 epidemic, the online shopping volume in Europe and North America declined, while the rise in interest rates may further weaken consumption. The reopening of China, another key market, has not yet formed the expected driving force for Vietnam.

"We were a little optimistic at the beginning of the year," said Giang Nguyen, head of a local shoe factory. At present, overseas demand is sluggish, and domestic orders in Vietnam are also slowing down.

HSBC stated that sluggish overseas demand remains the biggest downside risk to the Vietnamese economy, with import and export data showing that Vietnam is "particularly sensitive to a slowdown in the US economy" as the US market accounts for 30% of Vietnam's exports.

In addition, the investment approval process for enterprises has become stricter, which may affect the inflow of investment. According to import and export data from the Ministry of Planning and Investment of Vietnam, as of May 20th this year, Vietnam's approved foreign direct investment amount was 10.86 billion US dollars, 7% lower than the same period last year. (Translated from: European Times)