Signs of production recovery

Checking the quality of exported garments at Garment Corporation 10 - JSC. Photo: Viet Thanh

Imports of key raw materials increased

According to the Vietnam Textile and Apparel Association, textile and garment import and export activities in May and the first 5 months of 2024 showed positive signs, with many businesses having orders until the end of the third quarter, even until the end of 2024.

Notably, in May, the import turnover of cotton, fabric, yarn, and raw materials for textile and garment production of enterprises increased by 14.32% compared to April 2024. In general, the import turnover of cotton, fabric, yarn, and raw materials of all kinds in the first 5 months of 2024 increased by 15.34% compared to the same period in 2023. The increase in raw material imports in the context of production and business recovery has pushed the export turnover of the entire textile and garment industry to increase again. According to data from the Ministry of Industry and Trade , textiles and garments are a key industry with export growth in the first 5 months of the year at 6.3% compared to the same period in 2023.

Not only the textile industry, in the past 5 months, imports of many key raw material groups for production have increased sharply. According to the Ministry of Industry and Trade, accounting for 88.8% of the total import turnover in the first 5 months of 2024 are machinery, equipment, spare parts and raw materials for domestic production. In general, the import turnover of goods that need to be imported in the 5 months is estimated at 132.16 billion USD, up 19.8% over the same period in 2023. Of which, the import turnover of computers, electronic products and components is estimated at 40.25 billion USD, up 27.3% over the same period in 2023 and accounting for 27% of the total import turnover of the whole country; imports of machinery, equipment and spare parts reached 18.5 billion USD, up 15.4%. In addition, the import turnover of steel of all kinds increased by 28.3%; electric wires and cables increased by 25.6%; Raw plastic materials increased by 17.3%; fabrics of all kinds increased by 13.3%...

Notably, the import turnover of goods in May 2024 is estimated at 33.81 billion USD, up 12.8% over the previous month; meanwhile, the export turnover in May is estimated at 32.81 billion USD, up 5.7% over the previous month. Thus, the trade balance of goods in May is estimated at a trade deficit of 1 billion USD. This also means that May 2024 is the first month that Vietnam has a trade deficit after nearly 2 years of maintaining a trade surplus (export turnover is higher than import turnover) every month. In the first 5 months of 2024, the import turnover of goods is estimated at 148.76 billion USD, up 18.2% over the same period last year, of which the domestic economic sector reached 54.95 billion USD (up 24.2%), the foreign-invested sector reached 93.81 billion USD (up 14.9%); Estimated trade balance of goods surplus of 8.01 billion USD.

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

Expect to achieve the set goals

According to experts, in recent years, the trade balance has achieved a fairly sustainable surplus, so a trade deficit within a month is not a cause for concern. In addition, the current surge in imports could be a precursor to export growth and domestic consumption in the next phase.

Deputy Director of the Import-Export Department (Ministry of Industry and Trade) Nguyen Cam Trang said that the overall picture of import-export activities in May and the first 5 months of 2024 recorded positive growth figures, reflecting the continued recovery of production, business, import-export activities. In May alone, both exports and imports of goods increased well compared to the same period in 2023. Both foreign-invested enterprises and 100% domestic enterprises recorded good growth in export turnover. In particular, along with the increase in imports of raw materials, machinery and equipment for production, the purchasing managers' index (PMI), industrial production index (IIP) ... also increased, showing a clear recovery in production, exports and the economy.

According to Ms. Nguyen Cam Trang, the import of goods and raw materials of the domestic economic sector in the first 5 months reached 54.95 billion USD, up 24.2%, while the import of goods of the foreign-invested sector reached 93.81 billion USD, up 14.9%. This is proof that, entering 2024, the "health" of businesses has improved after 2023's efforts to cope.

According to Associate Professor, Dr. Nguyen Thuong Lang (National Economics University), the domestic enterprise sector has a higher import growth rate than the foreign-invested sector, showing a significantly high absorption rate of domestic raw materials, fuels and materials. Domestic enterprises have found new orders and are investing heavily in production. This is a sign of expanding domestic production capacity and improving the competitiveness of the domestic enterprise sector. In addition, high import growth and boosted production are the basis for attracting labor, creating jobs and mobilizing other resources to serve the goal of economic recovery.

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

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