Production signals are recovering.

Việt Nam•11/06/2024

Quality control inspection of exported garments at May 10 Corporation - JSC. Photo: Viet Thanh

Imports of key raw materials have increased significantly.

According to the Vietnam Textile and Garment Association, textile and garment import and export activities in May and the first five months of 2024 showed positive signs, with many businesses having orders until the end of the third quarter, or even until the end of 2024.

Notably, in May, the import value of cotton, fabric, yarn, and raw materials for textile and garment production increased by 14.32% compared to April 2024. Overall, the import value of cotton, fabric, yarn, and raw materials of all kinds in the first five months of 2024 increased by 15.34% compared to the same period in 2023. The increase in raw material imports, amidst the recovery of production and business, has led to a rebound in the export value of the entire textile and garment industry. According to data from the Ministry of Industry and Trade , textiles and garments are among the key sectors with export growth of 6.3% in the first five months of the year compared to the same period in 2023.

Not only the textile and garment industry, but also many key raw material groups for production have seen significant increases in the past five months. According to the Ministry of Industry and Trade, machinery, equipment, spare parts, and raw materials for domestic production accounted for 88.8% of the total import value in the first five months of 2024. Overall, the import value of essential goods in the first five months is estimated at US$132.16 billion, an increase of 19.8% compared to the same period in 2023. Of this, the import value of computers, electronic products, and components is estimated at US$40.25 billion, an increase of 27.3% compared to the same period in 2023 and accounting for 27% of the total national import value; imports of machinery, equipment, and spare parts reached US$18.5 billion, an increase of 15.4%. In addition, the import value of various types of steel increased by 28.3%; and electrical wires and cables increased by 25.6%. Raw plastic materials increased by 17.3%; fabrics of all kinds increased by 13.3%...

Notably, merchandise imports in May 2024 are estimated at US$33.81 billion, an increase of 12.8% compared to the previous month; meanwhile, merchandise exports in May are estimated at US$32.81 billion, an increase of 5.7% compared to the previous month. Thus, the merchandise trade balance in May is estimated to have a deficit of US$1 billion. This also means that May 2024 is the first month that Vietnam has experienced a trade deficit after nearly two years of maintaining a monthly trade surplus (exports exceeding imports). Overall, in the first five months of 2024, merchandise imports are estimated at US$148.76 billion, an increase of 18.2% compared to the same period last year, of which the domestic economic sector accounted for US$54.95 billion (an increase of 24.2%), and the foreign-invested sector accounted for US$93.81 billion (an increase of 14.9%). The trade balance for goods is estimated to have a surplus of $8.01 billion.

Electronic component manufacturing at Rhythm Precision Vietnam Co., Ltd. (Noi Bai Industrial Park, Soc Son District). Photo: Nguyen Quang

Expectations of achieving the set goals

According to experts, the trade balance has maintained a fairly stable surplus in recent years; therefore, a trade deficit within a single month is not a cause for concern. Furthermore, the current surge in imports could be a precursor to growth in exports and domestic consumption in the next phase.

According to Nguyen Cam Trang, Deputy Director of the Import-Export Department (Ministry of Industry and Trade), the overall picture of import and export activities in May and the first five months of 2024 shows positive growth figures, reflecting the continued recovery of production, business, and import-export activities. In May alone, both exports and imports of goods showed good growth compared to the same period in 2023. Both foreign-invested enterprises and domestic enterprises recorded good growth in export turnover. In particular, along with increased imports of raw materials, machinery, and equipment for production, the Purchasing Managers' Index (PMI) and the Industrial Production Index (IIP) also increased, indicating a clear recovery in production, exports, and the economy.

According to Ms. Nguyen Cam Trang, imports of goods and raw materials by the domestic economic sector in the first five months reached US$54.95 billion, an increase of 24.2%, while imports by the foreign-invested sector reached US$93.81 billion, an increase of 14.9%. This demonstrates that, entering 2024, the "health" of businesses has improved after their efforts to withstand the economic downturn in 2023.

According to Associate Professor, Dr. Nguyen Thuong Lang (National Economics University), the higher import growth rate of domestic enterprises compared to foreign-invested enterprises reflects a significantly higher level of domestic absorption of raw materials and fuels. Domestic businesses are securing new orders and investing heavily in production. This is a sign of expanding domestic production capacity and improving the competitiveness of the domestic business sector. Furthermore, increased imports and boosted production provide a basis for attracting labor, creating jobs, and mobilizing other resources to serve the goal of economic recovery.

"The above facts create expectations that production and exports will continue to increase in the next cycle. With businesses having orders, the industrial and import-export growth targets for 2024 can absolutely be achieved and exceeded," Mr. Nguyen Thuong Lang emphasized.

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