VinaCapital's chief economist said that recovering exports will push Vietnam's GDP growth from about 5% in 2023 to 6.5% in 2024.
Mr. Michael Kokalari, Chief Economist of VinaCapital, has just analyzed Vietnam's export situation, in which he assessed that the recent decline has bottomed out and exports may improve from the end of this year.
According to this expert, one of the obstacles to the Vietnamese economy is the decline in demand for "made in Vietnam" products. Exports experienced the longest decline in more than a decade, down 10% in the first 7 months of the year. However, there are some signs that this activity will recover in the fourth quarter thanks to the bottoming out of US retailers' inventories and the increasing wave of production shifts by multinational companies from China to Vietnam.
"We expect Vietnam's manufacturing and export activities to fully recover next year, with growth of 8-9%, boosting GDP growth to recover from around 5% in 2023 to 6.5% in 2024," VinaCapital's report said.
At the same time, this factor can support the income growth momentum of listed enterprises in the VN-Index in the coming time, with an increase from 6% in 2023 to more than 20% in 2024.
According to VinaCapital experts, the US is Vietnam's largest export market, accounting for about a quarter of total export value. However, retailers and consumer goods companies in the US ordered too many "Made in Vietnam" products last year in the hope of a post-pandemic economic recovery. But that did not happen.
Instead of buying more consumer goods, Americans are prioritizing spending on services like travel and dining out. Walmart, Target and Nike saw their inventories rise more than 20% year-over-year by the end of 2022.
To deal with the high inventory levels, multinational corporations have cut orders to Vietnamese factories. This effort has caused Vietnam’s exports to fall sharply, but this is now coming to an end, and Vietnam’s exports to the US increased sharply in July, up nearly 7% compared to June.
"Vietnam's exports to the US have improved significantly, from a 26% decrease in June to 14% in July. This has contributed to the recovery of Vietnam's total export value," said Michael Kokalari, Chief Economist of VinaCapital.
US retailers' year-on-year inventories are expected to bottom out later this year.
Vietnam is also benefiting from the relocation of production by multinational corporations. All Asian exporters have benefited to some extent from the bottoming of the US inventory cycle, but Vietnam is the only Asian country that has benefited significantly from the establishment of many new factories.
Similarly, new generation smartphone launches can have a major impact on Vietnam's exports and manufacturing activities.
Samsung said its smartphone sales fell 12 percent in the second quarter of this year, but it expects a recovery in the second half of the year, helped by the launch of new models. Apple and Google also plan major product launches. While these new models will not be manufactured in Vietnam, many of the components used in the new phones will be produced in Vietnam by Foxxconn, Luxshare, Goertek and other suppliers.
Another reason why VinaCapital believes Vietnam's exports will improve is the resurgence of FDI activity.
FDI enterprises appear ready to ramp up production in preparation for the Christmas season, as evidenced by the first increase in raw material inventories since late 2022, according to S&P Global, and Vietnam’s imports and exports both rising 2% month-on-month in July.
The decline in export orders in Vietnam improved, combined with a 4% month-on-month increase in industrial output in July, helping push Vietnam's PMI up from 46.2 in June to 48.7 in July.
"We believe that businesses have started to increase imports of input materials thanks to expectations of a recovery in export orders later this year," said VinaCapital's chief economist.
Minh Son
Source link
Comment (0)