The global economic recovery in 2023 does not seem to be smooth. As a major exporter, Vietnam’s economic data reflects the current sluggish global demand.
According to a report by the General Statistics Office (GSO) on Wednesday, Vietnam’s economic growth slowed to 3.32% in the first quarter of this year, which was Vietnam’s second-lowest first-quarter data in 12 years and almost the same as when the COVID-19 epidemic began three years ago. serious.
Exports fell by more than 10% in the first quarter
GSO said the slowdown in GDP growth was mainly due to reduced consumer demand. Textile and footwear orders fell by 70% to 80% in the first quarter, while electronics shipments fell 10.9% year-on-year.
Vietnam’s most important export processed products are electronic products, which has also led to a decline in Vietnam’s overall exports. Data show that overseas sales shrank by 14.8% year-on-year in March, while from January to March, Vietnam’s overall exports fell by 11.9% year-on-year.
This is a huge departure from last year. GSO stated that the global economy is in a complex development process and full of uncertainties, hinting at the troubles caused by high global inflation and weak demand.
The slowdown in external demand has a significant impact
In fact, Vietnam’s exports have shown signs of slowdown since last year. In the fourth quarter of 2022, orders from many Vietnamese companies have shrunk, residents’ unemployment rate has increased again, the growth rate of the secondary industry has slowed to 4.22%, and the overall economic growth has slowed down to 5.92%. This year, the situation is still not getting better.
Xu Liping, a researcher at the Institute of Asia-Pacific and Global Strategy of the Chinese Academy of Social Sciences and director of the Southeast Asia Research Center, pointed out that the overall growth prospects of most economies such as Europe and the United States are declining, external demand has slowed, many Vietnamese companies cannot operate at full capacity, and the unemployment rate promote. The global downturn has had a great inhibitory effect on Vietnam’s economic development.
The World Bank also pointed out in a report that economies like Vietnam that rely on commodities and exports are particularly vulnerable to a slowdown in external demand.
Companies are also struggling to stay afloat in the face of declining export orders. Due to the significant reduction in orders, companies have a wider choice of business. In addition to maintaining its original customers in the U.S. market, it has also begun to seek cooperation with buyers from Canada and other countries, and even accepts outsourcing work.
Strengthening cooperation with China is the best solution
Sluggish external demand is one aspect. Xu Liping pointed out that the more fundamental reason for Vietnam’s economic weakness is that the transformation and upgrading of Vietnam’s manufacturing industry has been lower than expected and failed to achieve substantial breakthroughs and leaps. As a result, the development momentum of Vietnam’s industrial sector has also failed. further improvement.
“Due to its geographical proximity and low labor costs, it has inadvertently gained growth through spillovers from China,” said Ryo Ikebe, a professor at Senshu University in Japan. “The Vietnamese government is worried about how long industrialization will continue. If labor costs continue to rise, , the competitive advantage of the assembly industry will disappear within 10 years. If intermediate products cannot be localized to a certain extent, subsequent sustainable development will become increasingly difficult.”
It is precisely because of this that the Vietnam News Agency reported that the international situation will be more severe in 2023 and will have a significant impact on Vietnam’s economic growth. Although the Vietnamese Congress has set an economic growth target of 6.5% for 2023, which is lower than the 2022 level, it is still a challenging task.
Given the challenging external environment and the lagging impact of monetary tightening policy, Vietnam’s economic activity is expected to remain weak this year, possibly falling below 5%.
Regarding this year’s prospects, Xu Liping said that in order to effectively deal with risks, strengthening cooperation with China is undoubtedly the “optimal solution.”
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