Pent-up demand

Vietnam's export value contracted continuously during the third quarter, causing most businesses and industry associations to worry about export failures this year. However, in just two months of "new normal" conditions, many exports have regained their stunning performance, and even completed their full-year targets sooner than expected. This robust growth was attributed to pent-up demand which works like a spring: The more it is pressed, the stronger rebound it generates.

Among the best performers this year is agricultural products. According to the Ministry of Industry and Trade, the agricultural export value was estimated at US$25.19 billion in the 11 months of 2021, up 11.4% year on year. Particularly, cassava exports expanded 64.7% in value and 47.1% in volume. Rubber, cashew nut and vegetable shipments also grew 40.5%, 44% and 8.6% in value, respectively.

This year's seafood export value may reach US$8.7 billion, higher than the full-year target of US$8.5 billion. Aquaculture was estimated to harvest 4.75 million tons, an increase of about 4.17% over 2020.

Pangasius exports also regained growth after three months. All production and business activities were paralyzed by the COVID-19 pandemic. In November alone, pangasius exports jumped 50% to bring the expected full-year value to US$1.54 billion in 2021. According to a representative of the Vietnam Association of Seafood Exporters and Producers (VASEP), Resolution 128/NQ-CP of the Government that changes the pandemic prevention strategy from “Zero COVID” to “safe and flexible adaptation, effective control of the COVID-19 pandemic", effective from November 11, 2021, has enabled seafood exporters to be more active and flexible in production and business and boost up exports.

The textile and garment industry also recorded a high export growth, estimated to rise 11.2% year on year to US$39 billion in 2021, which is even higher than the value in 2019 when COVID-19 had not emerged. Mr. Truong Van Cam, Vice Chairman of the Vietnam Textile and Apparel Association (VITAS), said that the wide outbreak stalled manufacturing and business activities of most companies and made them almost unable to fulfill orders signed with their partners. Their business operations recovered only when Resolution 128/NQ-CP took effect.

Mr. Tran Thanh Hai, Deputy Director of the Import-Export Department under the Ministry of Industry and Trade, said, after three years of enforcing the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and more than a year of executing the European Union - Vietnam Free Trade Agreement (EVFTA), businesses have effectively taken advantage of opportunities generated by these new-generation trade pacts. The CPTPP has increased exports to Canada, Mexico and Peru by 25 - 30%. Or with EVFTA, approximately 20% of exports are entitled to incentives after being granted the EUR1 certificate of origin (C/O), which is a very significant rate.

For example, footwear exports brought home US$14.06 billion in 10 months, up 3.9% year on year. Currently, footwear export is being boosted by the EVFTA Agreement, he said.

Steel was the best performer this year as it recorded a 136.6% growth, bringing the export value to US$10.27 billion. According to the Vietnam Steel Association (VSA), the unexpected export growth was driven by the soaring demand from Europe, the US, ASEAN and China. According to data from the Ministry of Industry and Trade, in four consecutive months from July 2021, iron and steel exports exceeded US$1 billion a month, peaking US$1.219 billion in October (compared to US$508 million in October 2020).

It is obvious that strong resilience and recovery of many exports have produced an impressive performance in the past time. In the first 11 months of 2021, the total export value was forecast at US$299.67 billion, up 17.5% year on year. The country saw seven items bring home more than US$10 billion. The export and import value was expected to set an all-time high of US$640 - 645 billion this year.

Optimistic forecasts

Dr. Can Van Luc, an economic specialist, forecast that Vietnam's exports may reach US$330-336 billion in 2021, up 17-19% over the previous year. In 2022, the total import and export value may rise by 13-15%.

Mr. Nguyen Quoc Toan, Director of the Department of Agricultural Product Processing and Market Development under the Ministry of Agriculture and Rural Development, estimated that agricultural exports will continue to grow until the end of the first quarter of 2022 on growing demand in major markets. Especially, given the current pandemic, many countries will import more agricultural products and food to actively face bad developments.

Ms. Le Hang, Deputy Director of VASEPPRO Center under VASEP, hoped that pangasius exports will bring home US$1.54 billion as expected in 2021, a slight growth of 3% over 2020. In 2022, the growth is expected at 7% to reach US$1.65 billion. Pangasius exports kept rising as free trade agreements continued to be an important lever for trade promotion to many markets, especially small but potential ones like Mexico, Brazil, Russia, Colombia and Thailand.

VITAS worked out three target scenarios for 2022, Cam said. In the most positive scenario, the garment and textile export value will reach US$42.5-43.5 billion. The value will be US$40-41 billion in the moderate scenario and US$38-39 billion in the worst scenario. Thus, the textile and garment industry is very confident about the export performance next year even in the lowest scenario.

Steel exports will be still very strong in December 2021 because short steel and cement supply from China may persist till the first quarter of the next year. Other driving markets such as Europe (EU), the US and ASEAN are signaling rising demand for steel imports to serve the economic recovery during and after the pandemic.