Vietnam’s exports soared in January 2024 by 42 percent over the same period last year and the upward trend is expected to continue in upcoming months. 

The increased demand for Made-in-Vietnam products promises to support the national economy to develop strongly. Consumer confidence and domestic consumption demand will recover after a weak year in 2023, according to Michael Kokalari from VinaCapital.

Vietnam in 2023 had a minus export growth rate for the first time since the global financial crisis. However, the signs of export recovery appeared in the last quarter of 2023, which gave a momentum for export turnover to soar by 42 percent in January 2024, thanks to a 33 percent growth rate in hi-tech electronic exports, which accounts for one-third of Vietnam’s total exports.

Analysts said Vietnam’s export turnover fell in 2023 because American importers, who ordered products in large quantities during the time when supply was disrupted because of Covid-19, had to cut orders last year to clear stocks. However, the sharp falls in inventory level, a 10-year drop, will prompt enterprises to place new orders.

VinaCapital believes that the number of orders continues to increase in months to come thanks to the surprising recovery of the US economy.

The sharp rise in Vietnam’s export turnover in January was also attributed to a 60 percent increase in computer and electronic exports. Smartphone revenue globally also began increasing again in late 2023 for the first time in the last two years, though the recovery of the computer sector was not clear.

Vietnam’s smartphone exports increased by 16 percent thanks to the launch of Samsung S24 model in January.

Another reason cited by analysts to explain the growth rate in January 2024 over January 2023 was the higher number of working days in the month (the 2023 Tet holiday lasted from January 21 to January 27, 2023).

Stock market

In January 2024, the manufacturing sector grew 19.3 percent over January 2023. As such, the export growth rate was much higher than the production growth rate. This meant that the manufacturers’ inventory index decreased the month before (Vietnam’s Purchasing Managers’ Index in January confirmed a decrease in inventory products).

The combination of the lower inventory index and higher new orders means that factory production needs to be accelerated to satisfy demand for Made-in-Vietnam products.

Production activities make up 25 percent of Vietnam’s GDP, so more production will help foster GDP growth. Moreover, 10 percent of Vietnam’s labor force works for foreign invested enterprises (FIEs) with relatively high salaries.

According to the General Statistics Office (GSO), FIEs cut their staff in early 2023, which was seen as why Vietnam’s GDP grew by 3.3 percent only in the first quarter last year. 

However, the number of workers in the manufacturing sector recovered after the last year’s layoff, while the pay for factory workers increased by 5-7 percent after bottoming out in 2023.

Analysts all believe that production activities and higher consumption demand, backed by the increase in number of jobs in the production sector, will help the economy. The weak consumer confidence and domestic demand, which were weak points in 2023, will change.

According to Vietnam Construction Securities (CSI), exports soared in January 2024 compared with January 2023 because of low export turnover last year, but it believes that prospects will be brighter in 2024 as large economies recover.

Export increases do not always mean rapid production increase because FIEs make up 70 percent of Vietnam’s import and export turnover, but the CSI believes that the economic growth and stock market will be more positive in 2024.

Le Quang Tri from Nhat Viet Securities thinks that Vietnam’s exports will be better in 2024 thanks to the demand recovery of large economies, and that the stock market will have a better performance this year.

Michael Kokalari thinks that domestic investors will pour more money into the first quarter and 2024 because bank deposit interest rates are low. Also, the economic recovery on a large scale will help listed businesses, especially banks and consumer companies, make high profits, making them more attractive to investors.

Manh Ha