The report, themed “Vietnam May data: Still a long way to go,” said while Vietnam’s May trade data points to no further deterioration, there is still a long way to see a meaningful rebound in its trade cycle.

Exports slightly fall

According to the report, exports fell 5.8% year on year in May, a slower pace than the market expected, but with lingering broad-based weakness. None of the major categories, including electronics, machinery, textiles/footwear and wooden furniture showed signs of a meaningful rebound.

Data as of April 2023 suggests substantial falling shipments in Vietnam’s three largest exporting destinations - US, China and the EU. In particular, with a hefty share of 30%, Vietnam is particularly sensitive to a US economic slowdown.

Despite exports falling by single-digit, imports declined at a much faster pace of 18.3% year on year. Arguably this is beneficial to Vietnam’s trade surplus, registering at 2.2 billion USD, twice of 2022’s monthly average, the report said.

However, given Vietnam’s import-intensive nature in its manufacturing sector, the extreme weakness in imports signals a sluggish rebound in future exports.

Rosy picture of tourism

“That said, it is not all doom and gloom. Vietnam’s services sector remains a bright spot, partially offsetting some external weakness. However, there is a clear divergence between big-ticket items, such as automotive sales, and tourism-related services – a trend that is occurring in regional peers as well,” the report pointed out.

Encouragingly, Vietnam continues to see a positive influx of tourists. Despite falling slightly from April’s high, Vietnam welcomed more than 900,000 tourists again, bringing its tourism recovery to around 70% of 2019’s level.