The Economy Continues its Resilient Recovery

Vietnam’s Trade Surplus Exceeds $70 Billion for Two Consecutive Months

Unlike previous years, where April to August marked a low season for the wood industry, this year, Woodsland Joint Stock Company has been working tirelessly to supply a large volume of wooden furniture to meet the year-end holiday demand in European and American markets. “In 2024, we are exporting an average of 250 containers per month, which is approximately 20% higher than in 2023. This growth even surpasses our initial target for the year,” shared Ms. Le Ngoc Mai, Head of Planning at Woodsland Joint Stock Company.

Not only is the wood industry on track to achieve its export target of $14.2 billion, but the textile industry is also making strides towards its goal of $44 billion in export turnover. Several other sectors, including hardware, electronics, and machinery, are also experiencing impressive growth.

“May 10 has already secured textile orders until the end of 2024. There is a noticeable shift in order trends towards Vietnam, and some customers have requested to place orders with May 10. However, our ability to accept new orders is limited as our factories are almost fully booked until the end of this year,” shared Mr. Bach Hong Long, Deputy General Director of May 10 Garment Corporation. He also predicted an increase in textile orders to Vietnam from now until the end of the year.

Data from the General Statistics Office reveals that the trade turnover for the past two months (July and August 2024) has surpassed $70 billion per month. Specifically, July achieved $70.11 billion, while August reached $70.65 billion. Notably, 2022 was a record-breaking year for trade, with a total turnover of $732 billion, yet no single month reached the $70 billion mark.

The recovery in consumer demand in Vietnam’s key export markets has propelled August’s exports to a record high of $37.59 billion—the highest ever. This surpasses July’s impressive figure of $36.24 billion by over $1 billion.

For the first eight months of 2024, exports reached over $265 billion, marking a 15.8% increase compared to the same period last year. Among these exports, 30 commodities achieved a turnover of over $1 billion (with six commodities exceeding $10 billion). On the import side, the turnover for the first eight months reached $246.02 billion (a 16.5% increase). Overall, the total import and export turnover for the first eight months of 2024 stood at $511.11 billion, reflecting a 16.7% increase.

The positive trade performance in the initial months of the year can be attributed to effective policies and solutions to address business difficulties, as well as the business community’s optimal utilization of preferential treatments in FTAs: “Vietnam is capitalizing on the global export growth in the first half of this year to increase orders, especially in major trading markets. Vietnam’s industrial production has increased significantly, contributing a quarter of GDP growth, which is proportional to the recovery of exports of processed and manufactured goods, electronics, textiles, and footwear,” assessed Ms. Dorsati Madani, Senior Economist at the World Bank in Vietnam.

Data from the General Statistics Office reveals that the trade turnover for the past two months (July and August 2024) has surpassed $70 billion per month.

Growth Drivers Improve on Both the Supply and Demand Sides

Alongside the positive trade performance, another notable bright spot in the economy for the first eight months of the year is the improvement in growth drivers on both the supply and demand sides.

On the supply side, industrial production has recovered rapidly. The index of industrial production (IIP) in August increased by 9.5% compared to the same period last year, and in the first eight months, it increased by 8.6%. Notably, the processing and manufacturing industry increased by 9.7%. “The processing and manufacturing sector has achieved a growth rate of about 10%, and this impressive growth is mainly driven by the upturn in export activities. Additionally, the production and distribution of electricity and water supply have recorded growth rates of around 10%. These two sectors are essential inputs for most economic activities. Their high growth rates reflect the potential for economic growth in the coming time,” said Mr. Tran Duc Anh, Director of Macroeconomics and Strategy at KB Vietnam Securities Company.

Vietnam’s Manufacturing Purchasing Managers’ Index (PMI) reached 52.4 points in August, marking the fifth consecutive month that the index has remained above the 50-point threshold. Notably, according to a report released by S&P Global, the two most prominent factors contributing to this positive trend are substantial increases in both output and new orders.

According to the General Statistics Office, approximately 21,900 businesses entered and re-entered the market in August. In the first eight months, there were about 168,100 businesses, outpacing the number of businesses that withdrew from the market (135,300).

On the demand side, foreign direct investment (FDI) continues to be a bright spot, with registered FDI capital in the first eight months reaching around $20.5 billion, up 7.0% over the same period. Of this, nearly $12 billion was newly registered FDI, a 27% increase, while realized FDI capital reached approximately $14.15 billion, up 8%. This is the highest realized FDI in the first eight months over the past five years.

Data from the General Statistics Office shows that the total retail sales of goods and services were estimated at VND 4,148 trillion in the first eight months of the year, up 8.5% compared to the same period last year. This indicates a continued recovery in consumer demand.