Slowing exports could prove a drag on Vietnam economy

Farmers harvest rice at a paddy field in Mai Lam village, outside Hanoi. Photo by Reuters/Kham.

Vietnam’s January-September GDP grew highest in nine years, but dwindling export growth could see economic expansion slow down in coming years.

Vietnam’s GDP growth of 6.98 percent in the first three quarters came even as many other Asian peers posted slower growth. China’s Q2 GDP grew 6.2 percent, lowest in almost three decades, while India’s Q2 economy expanded 5 percent, a six-year low.

However, Vietnam’s exports in the period grew only 8.2 percent, compared to 15.8 percent in the same period last year and 20 percent in 2017. The slower export growth has been attributed to declining agriculture and seafood exports, according to the General Statistics Office (GSO).

Agriculture exports in the first three quarters of this year decreased by 6.3 percent year-on-year. Rice exports value fell by 9.7 percent, while that of coffee plunged 20.7 percent.

Seafood exports declined 1.7 percent. Exports of shrimp fell 7 percent, while that of pangasius fish dropped 8 percent, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).

Exports to China have fallen because of new quality control regulations. China is no longer "easy" on Vietnamese agriculture produce, said Nguyen Trung Tien, head of GSO's trade statistics department.

Vietnam’s Jan-Sep trade deficit with China, its largest import market, ballooned by 50 percent year-on-year to $28 billion due to declining exports and increasing imports.

Experts said that the slower exports growth could negatively affect Vietnam’s economic expansion, given that it is a trade dependent country.

"Increasing trade tension and protectionism have had their impacts on Vietnam’s exports. Vietnam should lower its growth target to 6.5-6.7 percent next year," said economist Can Van Luc.

International organizations have also forecast slower growth in Vietnam’s economy in upcoming years, following a general global trend.

The Asian Development Bank (ADB) last month forecast a growth of 6.8 percent this year and 6.7 percent next year. The World Bank has forecast growth of 6.6 percent this year and 6.5 percent next year. Last year Vietnam’s GDP growth was 7.08 percent and it targets 6.6-6.8 percent this year.

Luc also said that amidst the slower exports growth, domestic consumption was a bright spot in the economy in the first three quarters of the year.

Sales of goods and services grew 11.6 percent year-on-year to VND3,600 trillion ($155 billion), lower than last year but higher than that of 2015-2017.

Other positive indicators were foreign direct investment (FDI) and business numbers. Disbursed FDI capital rose 7.3 percent year-on-year to $14.2 billion in the period, while number of new businesses rose 5.9 percent to over 102,000.

By Minh Son / VnExpress