Vietnam: Bracing for a Trade Winter

26/12/2022 05:54 English Diep Nguyen
After growing over 17% y-o-y in the first three quarters of 2022, export growth of Vietnam sharply moderated in October, with November seeing the first meaningful y-o-y decline in two years.
For Vietnam, 2022 was a year of booming recovery, making the country likely to remain one of the outperformers in Asia. In 3Q22, GDP rose 13.7% y-o-y (though partly helped by a low base), thanks to a resilient external sector and robust domestic demand. That said, the growth outlook is now clouded by increasing trade headwinds.

After growing over 17% y-o-y in the first three quarters of 2022, export growth sharply moderated in October, with November seeing the first meaningful y-o-y decline in two years. The primary drag came from electronics shipments, which account for 35% of Vietnam’s total exports. That said, recent data show that export weakness is more broad-based, including textiles/footwear, wood and machinery products. In particular, the economic slowdown in the US has exacerbated the woes, as the US is the largest market for many of Vietnam’s goods exports.

On a positive note, domestic demand has come to a partial rescue, thanks to an ongoing recovery in its labour market. While the unemployment rate dropped to 2.3% as of 3Q22, there is still potential for a further decline, as many jobs are concentrated in tourism-related sectors. Although tourists have started to return, arrivals are still less than 20% of 2019’s level.

Given lingering re-opening tailwinds, we raise our 2022 growth to 8.1% (previously: 7.6%). However, challenges will likely be more acute in 2023, particularly after the re-opening effect fades and the impact of high inflation starts to kick in with a lag. Therefore, we expect growth to moderate to 5.8% (previously: 6.0%).

In addition, Vietnam has started to see stronger inflation pressures, with the latest data exceeding the State Bank of Vietnam’s 4% “ceiling”. Not only has core inflation accelerated, but Vietnam has also seen a domestic energy shortage, keeping headline prices elevated. While we recently trimmed our inflation forecast slightly to 3.2% (previously: 3.4%) for 2022, we raised our forecast to 4.0% (previously: 3.7%) for 2023. This means the SBV will likely continue its tightening cycle.

Unlike regional peers, such as Malaysia and Indonesia, Vietnam has limited fiscal room to introduce immediate relief measures to alleviate the impact of high energy prices. Since April, the authorities have been cutting various taxes, including fuel and environment taxes. To combat rising inflation pressures, the Ministry of Finance is seeking to extend the current environment tax cuts on various fuels until end-2023. This suggests that, while global oil prices may cool down in 2023, the authorities may opt to reinstate the environment tax as early as 2024. In addition, other energy prices may rise in 2023.

Vietnam Electricity Group (EVN) has recently filed for a price hike in 2023, the first major price adjustment in almost four years, citing high energy import costs.

Các tin khác

Tough year expected for banks in 2023

Tough year expected for banks in 2023

With a dim outlook for the banking industry, most securities firms forecast that banks will post conservative profit growth in 2023.
Vietnam’s Hiking Cycle Under Way, HSBC Says

Vietnam’s Hiking Cycle Under Way, HSBC Says

In the latest report by HSBC, it is said that rising core inflation increasingly suggests the SBV’s hiking cycle is still under way.
Amazon Global Selling Vietnam Reveals its 2022 Vietnam SMEs Empowerment

Amazon Global Selling Vietnam Reveals its 2022 Vietnam SMEs Empowerment

Amazon Global Selling officially released the 2022 Vietnam Small and Medium Businesses (SMBs) Empowerment Report, which reflects a flourishing year of Vietnamese online export via cross-border e-commerce on Amazon.
Asia Economies to Benefit from China’s Opening in Second Half 2023

Asia Economies to Benefit from China’s Opening in Second Half 2023

All considered, Asia economies proved surprisingly resilient in the Year of the Tiger. True, surging living costs squeezed the pockets of consumers and bottom lines of many businesses.
One More HDBank Leader Registered to Buy HDB Shares

One More HDBank Leader Registered to Buy HDB Shares

Deputy General Director of Ho Chi Minh City Development Commercial Joint Stock Bank. Ho Chi Minh City (HDBank) registered to buy 120,000 shares of HDB.
Sign of a Loan Agreement for Ninh Thuan Province Onshore Wind Power Project

Sign of a Loan Agreement for Ninh Thuan Province Onshore Wind Power Project

The project in Ninh Thuan Province will help Vietnam to reach its clean energy and climate action targets by offsetting about 215,000 tons of carbon dioxide annually.
ADB, BIM Wind Sign $107 Million Financing Package to Support Wind Energy in Viet Nam

ADB, BIM Wind Sign $107 Million Financing Package to Support Wind Energy in Viet Nam

The wind energy power plant will help Viet Nam reach its clean energy and climate action targets by offsetting about 215,000 tons of carbon dioxide annually.
Vietnam to Receive $15.5 billion for Energy Transition

Vietnam to Receive $15.5 billion for Energy Transition

Vietnam has landed a $15.5 billion partnership with funders led by the European Union and the UK to help finance its transition away from coal.
FPT Announced Business Results in the 11 Months of 2022

FPT Announced Business Results in the 11 Months of 2022

Recently, FPT Software has expanded its presence in Southeast Asia with the opening of a new office in the center of Bangkok, Thailand.
ADB Lowers Growth Forecast for Developing Asia amid Global Gloom

ADB Lowers Growth Forecast for Developing Asia amid Global Gloom

The Asian Development Bank - ADB has lowered its economic growth forecasts for developing Asia and the Pacific amid a worsened global outlook.
Amazon Announces its Biggest Holiday Shopping Weekend Ever

Amazon Announces its Biggest Holiday Shopping Weekend Ever

Amazon announced that this year Thanksgiving holiday shopping weekend was its biggest ever, with customers around the world purchasing hundreds of millions of products across Thanksgiving, Black Friday and Cyber Monday.
Unilever Vietnam to Consolidate the Position in Circular Economy

Unilever Vietnam to Consolidate the Position in Circular Economy

Unilever Vietnam 's efforts on plastic waste management in particular, and sustainable development in general, are recognised at CSR Awards by Saigon Times Groups.
HSBC: The Vital Role of Voluntary Carbon Markets

HSBC: The Vital Role of Voluntary Carbon Markets

The voluntary carbon market, when used by companies to complement – not substitute – the decarbonisation of their own operations as they transition to net zero, is one tool that could accelerate action to tackle climate change, HSBC remarks.
Archetype Group Celebrated 20 Years of Growth

Archetype Group Celebrated 20 Years of Growth

Archetype Group was established in 2002 in Vietnam by a group of French entrepreneurs. Over the years, it has expanded its operations to 18 countries, employing more than 1000 collaborators.
ADB, HAYAT KIMYA to Support for Women and Children’s Lives in Vietnam

ADB, HAYAT KIMYA to Support for Women and Children’s Lives in Vietnam

In Vietnam, ADB announced that it is estimated that only 43% of women have access to sanitary pads while only 52% of mothers use diapers for their infants.
HDBank is the Large-Cap Listed Company With the Best Annual Report 2022

HDBank is the Large-Cap Listed Company With the Best Annual Report 2022

The poll of large-cap listed companies in 2022 jointly held by Ho Chi Minh City Stock Exchange (HOSE), Hanoi Stock Exchange (HNX) and Investment Newspaper on December 02 has honored HDBank as the top bank in the category of the best annual report.
Sobanhang Excellently Won the Champion of National Innovative Technopreneur Contest

Sobanhang Excellently Won the Champion of National Innovative Technopreneur Contest

This is the final round of a 3-month contest journey of supporting innovative startups in Vietnam and Vietnamese individuals living and working outside Vietnam.
General Director of HDBank Continues to Rregister to Buy 1 Million of HDB Shares

General Director of HDBank Continues to Rregister to Buy 1 Million of HDB Shares

This is the third time since the beginning of this year, Mr. Pham Quoc Thanh - General Director of HDBank has registered to buy HDB shares, which is expected to start from December 06, 2022.
HDBank is About to Issue USD 500 Million of Convertible International Bonds

HDBank is About to Issue USD 500 Million of Convertible International Bonds

Ho Chi Minh City Development Commercial Joint Stock Bank (HDBank) is collecting opinions from its shareholders to issue an additional 500 million USD of convertible bonds for international investors. Besides, this bank also applied for adjusting the foreign room from 18% to 20%.
Fitch Ratings:Vietnam Real Estates Sector Outlook Deteriorating Contracted Sales to Dip

Fitch Ratings:Vietnam Real Estates Sector Outlook Deteriorating Contracted Sales to Dip

Fitch Ratings expects rated homebuilders’ aggregate contracted sales in Vietnam to fall year-on-year in 2023.
Xem thêm
Phiên bản di động