Vietnam’s exports to rebound: VinaCapital economist
Vietnam’s longest streak of falling exports in over a decade has already bottomed out and export growth is likely to accelerate to some degree throughout 2024, writes Michael Kokalari, chief economist of VinaCapital.

A view of Cat Lai River Port in Ho Chi Minh City’s District 9. Photo courtesy of Vietnam News Agency.
In 2023, a plunge in Vietnam’s manufacturing output and exports were the biggest drags on the economy, just as we predicted in our “Looking Ahead at 2023” report, which was a non-consensus call at that time.
Global export orders are poised to start expanding again because the inventories of U.S retailers and other consumer facing firms look likely to end 2023 down about 5-7% year-on-year, according to recent earnings calls of firms like Walmart, Target, Best Buy, Nike and others. Inventories of U.S retailers had surged by well over 20% yoy in late-2022 and the resulting destocking efforts is reflected in the plunge in global export orders.
Inventory depletion in 2023 explains why Vietnam’s overall exports deteriorated from 11% growth in 2022 to a 4% drop in 2023. With exports equating to over 80% of GDP, a swing of that magnitude has a major impact on GDP growth. We only expect a modest rebound in exports to the U.S this year, partly because U.S credit card debt surged 40% over the last two years, which is constraining U.S consumers’ capabilities to continue purchasing “Made in Vietnam” products and which helps explains why 2023 holiday spending in the U.S was reportedly tepid.
Electronics exports already rebounding
Computers and electronics exports are already rebounding, although exports of smartphones and low value garment products are still falling (note that each of those three product categories accounted for about 15% of Vietnam’s total exports last year). Sales of PCs and other “work from home” products plunged post-Covid, but users have started upgrading to computers that are sufficiently powerful to run AI applications. This helps explain why market research firm Canalys expects global PC sales to rebound from a 12% drop in 2023 to nearly 10% growth in 2024
In contrast, global smartphone sales are only likely to improve from a 3.5% drop in 2023 to 3.8% growth in 2024 according to IDC. Smartphone sales resumed growing for the first time in two years in late-2023 (by about 5% year-on-year), but unlike PCs, for which there is a compelling reason for users to upgrade, consumers do not see sufficiently compelling reasons to upgrade their smartphones.
The net result of all of the above is that “the tech sector has bottomed out led by consumer electronics replacement demand” as Standard Chartered noted in its 2024 global strategy report. Standard Chartered also observed that electronics exports tend to lead overall export recovery/growth in Asia, which bodes well for Vietnam’s overall exports in 2024, while JP Morgan’s 2024 strategy report highlighted the resulting rebound in Asia-wide tech manufacturing output, which bodes well for GDP growth.
Additionally, we note that Vietnam’s imports of the electronic components used to manufacture computers and consumer electronics is surging, which is a reliable leading indicator that companies are ramping up to fulfil the orders in their pipelines.
Finally, garment and footwear exports have not started recovering yet. Firstly, demand from U.S consumers remains weak. Secondly, some production is relocating to countries with cheaper wages (especially Bangladesh). Thirdly, some production is moving out of Asia entirely to minimize the possibility that any of the cotton or other raw material inputs were sourced from China.
All of that said, the overseas customers of garment and footwear factories in Vietnam have generally guided those local firms to expect an increase in orders this year, according to our industry contacts. However, those Vietnamese factory managers also lament that their customers have essentially been giving them small lot and/or last-minute orders rather than the pipeline of 6-12 months’ work as they had in the past.
Nearly one-half of PC distributors expect their sales to increase by over 10% this year, and nearly one-quarter of distributors expect growth of over 25%. Following the passage of the U.S Uyghur Forced Labor Prevention Act at the end of 2021, the number of garment shipments from Vietnam to the U.S encountering issues entering the country surged even though there are no Uyghur minorities in Vietnam.
Consequently, over half of the fashion companies surveyed by the U.S Fashion Industry Association said they now aim to find new suppliers outside of Asia (not just outside China) in order to reduce the possibility that any of the cotton or other raw material inputs used to produce their products could have ultimately been sourced from the Xinjiang Uyghur autonomous region of China.
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