Exports remained resilient despite nationwide lockdown and supply disruption

As the fourth wave of COVID-19 had been brought under control, on Oct 11, the government issued Resolution No. 128/NQ-CP adopting provisional guidelines on “Safe, flexible adaption to and effective control of COVID-19 pandemic”. The government said COVID-19 fight remains a key task in order to protect public’s health and lives while trying to turn the country into “new normal” as soon as possible. Based on the guidelines, most localities across the country have relaxed social distancing measures and reopened the economy. Following this, we have seen steady recovery in domestic consumption, industrial production and exports since Oct 2021. We expect the economy to accelerate its

recovery toward the year-end and reiterate our 2021F GDP growth of 2.0%, in baseline scenario.

Exports remained resilient despite nationwide lockdown and supply disruption

Exports started the year of Ox with strong positive momentum on the back of high demand from advanced countries in the west, which had re-opened their economies since late-2020 thanks to high vaccination rate. Exports also gained benefit from a number of free trade agreements (FTAs) that Vietnam had signed in the past few years such as CPTPP and EVFTA. Despite growth rate slowing down since late-2Q21 due to negative impacts of Delta-variant and rising shipping costs, exports still recorded quite impressive performance in the first ten months of this year, with value increasing by 17.4% yoy to US$269.8bn. All Vietnam's main export markets recorded positive growth in the first 10 months of 2021, led by the U.S. market with an increase of 23.1% yoy, followed by ASEAN (+22.7% yoy) and China & Hong Kong (+16.4% yoy).

Figure 8: Vietnam net exported US$125m in 10M21 Figure 9: Top Vietnam’s export market (% change yoy)

Source: Vietnam Customs, VNDIRECT RESEARCH *E6 includes Holland, Germany, England, Italia, Belgium and France Source: Vietnam Customs, VNDIRECT RESEARCH Among Vietnam’s export products, the items that recorded strong growth rate in 10M21 include steel (+132.1% yoy), coal (+125.1%), plastic materials (+71.2% yoy), camera & camcorders (+56.1% yoy), textile fibres (+55.0% yoy), rubber (+47.1% yoy) and petroleum (+46.4% yoy). As for imports, Vietnam's import spending climbed to US$269.6 billion (+28.3% yoy) in 10M21. Vietnam has seen a strong increase in imports this year due to (1) increasing demand for imported raw materials, machinery and input products, (2) rising commodity prices, especially crude oil, steel, rubber, and (3) a surging in freight rates. As a result, Vietnam’s trade surplus narrowed to US$125mn in 10M21 from surplus of US$19.6bn seen in the same period last year.