HSBC has warned that Vietnam is facing export risks as the country continues to be hit hard by the global trade slowdown.
In its recent “Vietnam at a Glance” report, the bank said Vietnam posted its first year-on-year reduction in exports in two years, led by an economic slowdown in the US, its largest export destination.
Global orders are down sharply, taking a toll on Asian exporters and Vietnam is no exception. November data shows that exports fell 7.4 per cent year-on-year, more than HSBC’s forecasts and market expectations. This was the first significant year-on-year decline in export growth in two years, driven by weakness across the board.
As a rising star deeply embedded in the global manufacturing ecosystem, Vietnam is not immune to global trade slowdowns. Its manufacturing PMI has been consistently heading downwards since May, ultimately dipping into contractionary territory since September, with new orders falling.
Over 630,000 workers have been affected by declining foreign orders since September, with around 90 per cent experiencing a cut to their working hours.
The primary reason is low electronics shipments, which account for around 35 per cent of Vietnam’s total exports. New global orders for electronics have fallen dramatically in the second half of this year, affecting consumer electronics more than industrial products. The impact has been seen across Vietnam’s three major exporting destinations: the US, mainland China, and Europe.
Traditional exports such as textiles and footwear have also begun to head downwards.
Amid high inflation and consumption shifting from goods to services in the West, HSBC forecasts that Vietnam is likely to continue posting declines.
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