Vietnam’s November export growth slows as external demand remains soft
Its trade surplus for goods tapers to US$1.1 billion, from US$2 billion in October
[HO CHI MINH CITY] Vietnam posted a softer year-on-year rise in goods exports in November and the smallest trade surplus in six months, as external demand in key markets remained relatively weak.
Estimates from the Vietnamese government’s statistics body on Friday (Dec 6) showed that its exports in November grew 8.2 per cent from the year before to about US$33.7 billion, slowing down from the double-digit rates seen in the past nine months.
The expansion was led by outbound shipments of computers and electronics (21.8 per cent), textiles and garments (10.9 per cent) and footwear (11.9 per cent).
However, smartphones and components – a major export category for the trade-reliant country – contracted in November for the fourth consecutive month, posting a 13.9 per cent year-on-year decline to about US$3.8 billion.
Imports rose 9.8 per cent year on year to US$32.7 billion, easing from the previous month’s 13.6 per cent increase.
The trade surplus for goods in November continued to narrow to US$1.1 billion, from US$2 billion in October and US$1.5 billion the year before.
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Overall, exports and imports in the first 11 months still grew markedly – by 14.4 per cent and 16.4 per cent year on year, respectively – leading to a trade surplus of about US$24.3 billion.
Soft international demand
Industrial production climbed at the fastest pace since July – at 8.9 per cent from the level in November 2023, and was faster than the 7.1 per cent in October. The impact of typhoon Yagi, which hit in September, is diminishing.
Factory activity also continued to grow in November, though more slowly than in the month before, going by an S&P report on Vietnam’s purchasing managers’ index.
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Andrew Harker, economics director at S&P Global Market Intelligence, said: “To some extent, the slowdown in growth reflected weakness in international demand, with exports down to the largest extent since July 2023.
“We hope demand will solidify in the coming months, giving firms the confidence to expand their capacity,” he added.
Nguyen The Minh, head of research and development at Yuanta Securities, echoed this viewpoint; he expects an increased alignment of accommodative monetary policies globally to boost growth in the coming year, which would, in turn, improve demand and drive Vietnam’s exports.
“I think Vietnam will also benefit from US tariff hikes in a Trump 2.0 that would initially target China, Mexico and Canada,” he said, adding that risks of tenser trade relations with the US due to the ballooning trade imbalances and rule-of-origin disputes concerning China’s trade diversion are manageable, at least in the next two years.
“American consumers still need to buy from countries such as Vietnam for goods it lacks the competitive edge to produce,” he noted.
Credit growth challenge
Headline inflation eased in November to 2.8 per cent year on year, lower than the 2.9 per cent in October. However, core inflation, which excludes volatile items, was at a seven-month high of 2.8 per cent.
Overall, average consumer prices in the first 11 months rose moderately by 3.69 per cent year on year.
Adam Ahmad Samdin, assistant economist at Oxford Economics, said that as inflation stays below the 4 to 4.5 per cent target range of the State Bank of Vietnam (SBV), the pressure of a strong US dollar might weigh more heavily on borrowing, as SBV’s measures to defend the domestic currency might result in tighter financial conditions.
“If the US dollar remains strong, credit growth may face additional headwinds on top of existing drags within the real estate and banking sectors,” he wrote.
In May this year, Adam noted that the financial fraud crackdown, including investigations into the crimes led by real estate tycoon Truong My Lan, had led to stress in the banking and real estate sectors, and stretched the limited capacity of local firms to absorb funds.
However, SBV announced that the credit growth in the banking system as at Nov 22 had risen by 11.12 per cent from the end of 2023, making the 15 per cent annual growth objective within reach.
Ambitious growth targets
Vietnam’s premier Pham Minh Chinh said that the government has aimed for about 8 per cent expansion in gross domestic product in 2025, from a forecast growth of about 7 per cent this year.
This could be the buildup in momentum for the country’s targeted double-digit growth for the 2026-to-2030 period.
The ambitious goal is backed by the government’s determination to revitalise traditional growth drivers – investment, consumption and exports.
Retail sales from January to November advanced 8.8 per cent from the year before, but still failed to reach the pre-pandemic rates of 11.5 per cent and 11.8 per cent for the corresponding periods in 2018 and 2019, respectively.
The disbursement of public investment is still sluggish, with spending in the first 10 months staying at just 47.43 per cent of this year’s plan.
Registered foreign direct capital (FDI) in Vietnam as at Nov 30 inched a mere 1 per cent from the year-ago period, to an estimated US$31.4 billion. However, disbursed FDI remained robust at nearly US$21.7 billion, up 7.1 per cent from last year.
“Enhanced public investment in infrastructure will serve dual objectives – that of fostering job growth, and also addressing the major challenge of attracting FDI,” said Yuanta Securities’ Minh.
Vietnam will strive to complete major infrastructure projects, including a 3,000-km expressway and Long Thanh International Airport, said the government in a statement.
Last weekend, it also approved a public investment scheme for the US$67 billion North-South high-speed railway. Work is expected to start in 2027.
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