As we roll through 2023, global trade is hitting a bit of a slowdown due to weaker consumer spending, the ongoing ripple effects of Covid, War and trade tensions between countries.But amidst this lull, some interesting corners of the global economy are still bustling with trade activity.
The days of everyone buying loads of stuff and everything being "Made in China" or"Made in Vietnam" seem to be shifting. Instead, we're in an era of specific supply chains and ever-changing business partnerships.
This situation actually presents opportunities for those who can spot them, but it requires keeping a close eye on economic trends and trade numbers.
While there are exceptions, like agriculture and cars, where trade is holding strong for now, things are different overall. The trade in cars and trucks, especially electric ones, is booming thanks to China's big investments and production.
Vietnam is feeling the pinch from reduced buying in the US and Europe. Their overall exports have dropped by 11.9% in the first half of 2023, going from $187 billion to $164.7billion. This is part of a larger trend that has led the World TradeOrganization to predict that global trade will only grow by 1.7% in 2023, down from 2.7% in 2022.
However, within Vietnam's export decline, there are some sectors that are doing surprisingly well. This highlights how complex global trade has become. Despite the challenges this year, Vietnam is still a major hub for manufacturing in the region, and it's still a popular choice for thousands of companies from the US, Europe, andChina.
There are specific areas worth noting where Vietnam is seeing growth. Even though their overall exports have been down, some sectors are thriving. For example, exports of paper and paper products went up by 11.1% to $1.1 billion
However, Vietnam's exports of furniture, clothes, and other everyday items that were driving their economic growth have been decreasing.
This is why Vietnam's overall exports to China dropped by 0.7% to $25.9 billion. Imports fell by a larger 19.1% to $49.6 billion because Vietnamese factories needed fewer materials for producing goods.
Vietnam's trade with its biggest partners, like the US and the EU, have all shrunk this year. Exports to the US from Vietnam fell by 22.1% to $44.4 billion, and what Vietnam bought from the US dropped by 9% to $6.9 billion. Exports to the EU went down by 11%to $21.5 billion, and imports from the EU decreased by 8.9% to $7.4 billion.
But it's not all gloom and doom. There are these smaller, specialized trading relationships that matter, not just in terms of products but also between countries. Vietnam's exports toIreland went up by 16.6% to $238.2 million. Exports to Brazil grew by 14.8% to$1.3 billion, and those to Saudi Arabia jumped by 68.1% to $509.4 million.Shipments to Indonesia increased by 7.6% to $2.5 billion.
These unique supply chains and trading relationships, along with impressive growth in their service industries, have helped Vietnam weather the storm. In the second quarter of2023, Vietnam's economy grew by 4.1% compared to the same time last year, which was higher than the 3.3% growth in the first quarter of 2023. With global demand wavering, Vietnam's central bank has been more active, lowering interest rates four times this year. Additionally, the government has cut the value-added tax to help stimulate economic activity.
