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Analyst Pin-board Rising commodity prices have clouded trade outlook

• Export growth improved in Feb 2022.
• Rising raw material prices could affect the prospect of trade balance.
• Exports of non-tech products continued to improve in Feb 2022.
• Import of raw materials for production is on the rise.

Export growth improved in Feb 2022

Trade activities continued to their positive growth during last month. Specifically, export growth continued to improve to 15.5% yoy in Feb 2022, higher than the 8.1% increase in Jan 2022. On a month-on-month basis, export turnover decreased by 24.1%, mainly due to the impact of the Lunar New Year holiday. On the other hand, import turnover recorded a stronger rise, increasing by 22.3% over the same period (compared with an increase of 11.3% in Jan 2022). In the first two months of the year, Vietnam's exports and imports grew by 11.2% and 16.1% respectively over the same period.

Although Vietnam's trade growth is still a bright spot in the economic picture, the IMF recently said it would lower its forecast for global economic growth in its updated report next April. The Russia-Ukraine crisis and sanctions between Russia and the West are likely to cause global trade to decline, thereby indirectly affecting Vietnam's export prospects. We expect Vietnam's exports to grow at 15-18% this year, however, rising global commodity prices and potential supply disruptions could cause the trade balance to turn a slight deficit for the whole year of 2022.