In the ongoing disruption of the global economy, Vietnam is emerging as a clear winner. Its economy is expected to grow by 4.8% of GDP in 2021, according to the World Bank.
To be sure, the Covid-19 pandemic has hit Vietnam this summer, after the country was largely successful at curtailing the virus in 2020. That will hurt the country’s second half of 2021, but long-term trends still support Vietnam establishing itself as a major economic power.
Crucial to its rise are powerful manufacturing and shipping sectors, which benefited the most of any major trading power from the global economic recovery in 2021, according to an analysis by Trade Data Monitor, the world’s premier source of trade statistics.
Overall, Vietnamese exports rose 28.9% to $158.3 billion in the first six months of 2021. In June, exports increased 20.5% year-on-year to $27.2 billion. Vietnamese imports increased 35.8% to $159.3 billion during the first six months of 2021. Vietnam’s GDP in 2021 is expected to be a bit under $300 billion, making it a rare country whose total trade is twice that of GDP, without the stimulus of oil or mining resources.
The country of 96.5 million has taken its place as the prime beneficiary of China’s changing trade relationships with the U.S. and Europe, rising protectionism in the West, supply chain adjustments, and the boom in economies across Asia. The combination of low labor costs, stable exchange rates and prodigious foreign investment from multinational companies have turned Vietnam into a shining star.
It’s the versatility of the Vietnamese export machine that makes the country’s future especially bright. Vietnam’s factories make everything from Nike and Adidas shoes to Samsung and Apple phones, as well as wide varieties of furniture and electronics. It’s also been boosting its shipments of heavy industrial goods like iron and steel, according to TDM data.
By far, the biggest buyer of Vietnamese exports has been the U.S. It’s the world’s top consumer market, which indicates how vital Vietnam has become to the world’s top consumer manufacturing companies.
Overall, the U.S. boosted shipments from Vietnam 44.7% in the first six months of 2021, to $47.8 billion. By comparison, Vietnamese exports to the EU increased 18.2% to $19.4 billion. It’s possible that the two Asian power will divide up the world: China will become Europe’s principal manufacturer, and Vietnam, that of the U.S. Exports to China rose 24.7% to $24.5 billion. The biggest category of Vietnamese exports to the U.S. was electronics, up 43.5% to $15 billion, followed by furniture and bedding, up 74.5% to $6.8 billion.
Overall, Vietnamese exports of iron and steel exports rose 116.9% to $4.5 billion, and exports of footwear increased 27.7% to $10.3 billion, underscoring the diversity of its economy.
On the import side, Vietnam is still shipping in many outfits imports as part of corporate supply chains. Imports from the U.S., for example, rose only 8.3%, to $7.6 billion during the first six months of 2021, while imports from China rose 51.6% to $52.9 billion in the first six months of 2021.
The exception is Australia, which has grabbed much bigger shares on Vietnamese import markets. Australia boosted exports to Vietnam 62.5% to $3.4 billion in the first six months of 2021. The bulk of that was essential commodities, such as iron ore, cereals, copper and cotton, according to TDM data.
Australia, which has a tense trading relationship with China, increased imports from Vietnam 32.7% to $2.6 billion in the first six months of the year. Vietnam is now Australia’s third source of electronics, behind only China and the U.S. Overall, Vietnam increased shipments of electronics 37.4% to $932.1 million. Vietnam is also grabbing market share in other sectors that China has dominated. It ramped up exports of footwear 57.1% to $258.1 million, and increased sales of furniture and bedding 53.6% to $131.4 million.