Little promise in outlook for Q2 exports to US, EU

Hanoi (VNA) - The COVID-19 pandemic has already made it quite difficult for Vietnamese goods to enter the US and EU markets and the outlook for the second quarter is also gloomy, according to Cong Thuong (Industry & Trade) newspaper.

In the first quarter of this year, Vietnam earned 59.08 billion USD from exports, up just 0.5 percent year-on-year, while imports stood at 56.26 billion USD, down 1.9 percent, the General Statistics Office (GSO) has reported.

The country therefore posted a trade surplus of 2.8 billion USD compared to 1.5 billion USD in the same period last year. Many trade experts said this in an acceptable figure given the coronavirus outbreak.

There are signs, however, that prospects in the second quarter will be even bleaker, especially regarding exports to the US and EU, both of which have been hit hard by COVID-19.

Bui Trong Tu, Deputy Director of the GSO’s Trade and Services Statistics Department, said almost all export contracts Vietnamese businesses have struck with partners in these two key markets have been suspended.

Exports are certain to be greatly affected if the pandemic continues throughout Q2, he forecast, as in addition to China, the US and the EU are among the largest importers of Vietnamese goods, particularly textiles, garments, and footwear, and aquatic products.

The number of apparel and footwear orders from the two markets fulfilled in April and May are projected to fall sharply. New orders to be delivered in June or later, meanwhile, haven’t even been negotiated.

Wood processing companies said if the situation surrounding the pandemic does not improve by the end of April then some will have to cut production by 70 percent.

If the outbreak remains during the second quarter, most will have to cease production for export contracts. Only a few producing wooden items for sale on the domestic market will be able to sustain operations, but only at 10-15 percent of capacity.

In the electronics industry, Samsung Electronics Vietnam has reported that the US and EU account for more than 50 percent of its export value. Global revenue for Samsung Electronics this year is likely to decline, and it may have to revise its export target to about 45.5 billion USD, compared to an actual 51.38 billion USD in 2019.

Meanwhile, switching the shipment of key products to other markets such as India, the Republic of Korea, and Japan cannot be done overnight, and it will be difficult to compensate for losses incurred as exports to the US and the EU tumble, the Cong Thuong newspaper noted.

Given this, businesses are pinning their hopes on the US and EU controlling the pandemic, especially given the EU-Vietnam Free Trade Agreement (EVFTA) is set to take effect this year.

An increase of 20 percent in exports this year was not unrealistic under the agreement, according to GSO General Director Nguyen Bich Lam, with the greatest beneficiary being aquatic products./.