Export - trade surplus 2023 and issues for 2024

Exports of goods are at their peak in the last days of 2023 with many orders to serve the New Year's needs of import markets from all over the world . All are promising the highest results in Vietnam's international trade activities in a difficult and challenging 2023.

Exports - one of the three important pillars of economic growth (investment, exports and consumption) have experienced negative double-digit growth since the first quarter of 2023 - with a decrease of 11.9% compared to the same period last year. This figure accurately reflects the difficult situation of domestic production - when the processing and manufacturing industry always accounts for 85 to more than 90% of Vietnam's total export turnover of goods, it has also declined sharply since the end of 2022 and the beginning of 2023.

Going against the current in the context of exports of key commodities heavily dependent on large markets such as the US and EU - but these markets are strongly affected by inflationary pressure leading to tightening of spending, reduced aggregate demand, and reduced imports of non-essential consumer goods. Not to mention that many importing countries have set high requirements for sustainable development and environmentally friendly production, so Vietnamese products and goods are increasingly facing fierce competition with exporting countries with similar commodity structures.

Exports of agricultural and food products hit new record

Promoting trade promotion, connecting with Vietnamese Trade Offices and Trade Counselors abroad to seek market opportunities, promote Vietnamese products with strengths and high quality to enter new markets; making the most of opportunities from signed bilateral and multilateral free trade agreements to boost exports... is of particular interest to state management agencies, and this is also a significant bright spot, achieving many results in Vietnam's export activities in 2023. Exporting agricultural products and food, including rice exported to the EU market - the export volume is not much, but has exported high-quality rice varieties, especially fragrant rice with high value.

Mr. Tran Thanh Hai - Deputy Director of the Import-Export Department, Ministry of Industry and Trade affirmed: "In that picture, we see that fruit and vegetable exports and rice exports are bright spots. This is also a very positive result showing a very strong recovery and market expansion... In the current common difficulties, there is a positive point, which is that our production force is still very well maintained and continues to be a place to attract investment. Second, we are also making good use of free trade agreements (FTAs) to maintain exports to key markets".

According to forecasts, Vietnam's export turnover is likely to reach over 350 billion USD in 2023.

Based on the actual results of Vietnam's fruit and vegetable exports after 11 months, the Vietnam Fruit and Vegetable Association forecasts that fruit and vegetable exports in 2023 are expected to reach 5.6 billion USD - a record for this industry so far.

Mr. Dang Phuc Nguyen, General Secretary of the Vietnam Fruit and Vegetable Association, acknowledged: "The State, the Government, the Ministry of Agriculture and the Ministry of Industry and Trade have negotiated to open the market, signed many agreements, signed protocols with China as well as other countries to create favorable conditions for Vietnamese agricultural products, agricultural products, vegetables and fruits to be widely consumed around the world. In addition, Vietnamese farmers and businesses are increasingly guided on how to grow crops that meet international standards, meeting the requirements and tastes of importing countries."

According to the report of the Ministry of Industry and Trade on the situation of industrial production and trade activities in the first 11 months of 2023, the total import and export turnover of goods in the first 11 months reached more than 619 billion USD, down 8.3% over the same period last year, of which, the export turnover of goods is estimated at 322.5 billion USD, down 5.9% over the same period last year. With the recovery in the last months of the year, the decline in exports for the whole year has narrowed significantly compared to the 12% decline in the first half of 2023.

A notable point in import-export activities in 2023 is that the trade balance of goods recorded a large trade surplus. Although exports improved in the following month compared to the previous month and maintained an export turnover of more than 30 billion USD in the last months of the year, the trade surplus continued to increase, bringing the trade balance of goods in 11 months to a trade surplus of nearly 26 billion USD. Along with the import turnover still decreasing by 10.7%, it clearly shows that the difficulties of the processing and manufacturing industries will not stop in 2023.

Import - Export Challenges 2024

The Ministry of Industry and Trade - the state management agency for industry and trade - identified this as a major challenge for 2024 - when the conditions for "carbon footprint reduction" from major import markets are increasingly stringent. Promoting green exports is therefore a continuous theme of trade promotion programs in late 2022 and 2023, to find a more sustainable and effective direction.

As a bridge connecting businesses to export markets, Mr. Vu Ba Phu, Director of the Trade Promotion Agency, said that green transformation is an inevitable trend, so the Ministry of Industry and Trade has been focusing on 3 groups of tasks that need to be done to support businesses, industries, and localities in implementing in 2024 and the following years.

Mr. Vu Ba Phu affirmed: "I think that in parallel with improving capacity to meet new standards, relevant ministries and branches will have to quickly supplement and complete the legal framework, set standards and regulations on green transformation, what is green for each specific field, what is the Index on green transformation in trade promotion.

We have also developed a Trade Promotion Capacity Index, but in the near future, that Index will be supplemented with indicators on green transformation in trade promotion and export promotion. Our government has a program related to perfecting the legal framework from 2023 to 2027. Accordingly, ministries and branches have also developed a program to perfect the law for the 2023 to 2027 period related to green transformation, related to production activities related to the circular economy and responsible business.

Assessing the impacts of the green transition trend in international trade and exports in the context of implementing the EU's Carbon Border Adjustment Mechanism (CBAM), not only stopping at 6 industrial products that emit a lot of carbon and not only the EU but also other countries such as the US, Canada... have, are and will apply green regulations in import and export, Dr. Nguyen Phuong Nam, an international assessment expert on the United Nations greenhouse gas inventory report (UNFCCC) said that responding to strict standards from import markets must be considered mandatory for entities participating in export activities, in which, along with the role of state management, there is the initiative from enterprises themselves, especially Vietnamese small and medium enterprises participating in the export of agricultural and food products.

According to Dr. Nguyen Phuong Nam: "Small and medium-sized enterprises have limited resources, people and knowledge, so they must have a certain flexibility, which is also an advantage. We must change from a strategic plan that focuses on one or two products, not spreading out all existing products, which will waste a lot of resources and affect the short-term profits of the enterprise.

Therefore, there needs to be a comprehensive change strategy, focusing on a number of product lines. Vietnam has up to 50,000 enterprises with agricultural products. However, only about 160 - 200 enterprises have organic products and a business does not have all of its products organic, only a few products...".

According to trade experts, to respond appropriately to green standards in the import and export of goods in the coming time, there are at least 7 "needs" that businesses must do, which are: Need to diversify trading partners; Need to assess risks and plan scenarios, build carbon reduction strategies; Need to participate in Carbon Offset projects; Need to assess carbon intensity; Need to invest in innovation and technology and Need to participate in industrial cooperation initiatives. Only then can export activities develop sustainably.

According to Nguyen Long/VOV1

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