研究中心

U.S July Retail sales and Vietnam T&G exports According to the latest data from the U.S. Census Bureau, retail sales in the U.S. increased by 0.7% MoM in July of 2023, marking a fourth consecutive rise, and beating market forecasts of a 0.4% increase. In more detail, US clothing store sales grew 1.34% YoY in July, slightly decelerated from 2.69% in June, but remain higher than the one-year slowest growth of 0.32% in April. The potential upturn in US clothing sales, given a relatively strong correlation with Vietnam T&G exports, subsequently benefiting this export sector in the latter half of 2023.

July’s data revealed a substantial improvement in economic activities with a softer decline in export turnover, an improving industrial production, and a renewed acceleration in retail sales. On one hand, U.S. consumers tend to regain their confidence during the late phase of the global interest rate hike, fastening the resolution of the overstocking and consequently promoting Vietnam’s export activities. On the other hand, retail sales recorded a higher growth rate than in June coupled with moderate inflation after a series of easing fiscal policies, likely reflecting an expanding demand. We predict economic performance to improve further next month due to softening external headwinds and expanding domestic demand.

Although the economic performance picked up in 2Q23 in the late stage of the global interest rate hike, we believe that the acceleration of economic activities will need more time to be material due to the insignificant improvement of external factors and the weakening recovery in domestic consumption. On the upside, public investment will continue to be a spotlight in 3Q23 thanks to the government's effort in realizing the significantly higher workload than last year. In addition, the well-controlled inflation and stable exchange rate provide more space for the monetary authority to follow the easing tendency in the next quarter.

Although the economic performance picked up in 2Q23 in the late stage of the global interest rate hike, we believe that the acceleration of economic activities will need more time to be material due to the insignificant improvement of external factors and the weakening recovery in domestic consumption. On the upside, public investment will continue to be a spotlight in 3Q23 thanks to the government's effort in realizing the significantly higher workload than last year. Investment opportunities exist in Power and Agriculture, Seafood industries that backed by El-Nino and China consumption themes. Besides, crushed stone industry also offers a lucrative choice from 3Q23 for those investors seeking for rising public spending theme. We expect the target range for VNIndex in 2H23 to be 1,260-1,340 points.

GSO’s June report shows a slight acceleration in economic performance for the second quarter of 2023. Although the economic growth surpassed the downgraded market assessment, it is far from the expected value in the eco-socio tasks. For the latest update in June, export activities deteriorated under the persistent slowdown in the consumption of Vietnam’s major trading partners, showing challenges for the economy to speed up. Regarding domestic factors, the recovery momentum in post-pandemic exhausted with retail sales much lower than the potential level. In the short term, we predict public investment will mainly support economic growth before material improvement in external factors occurs.

The US-China tech war has led to significant impacts on manufacturers, resulting in a shift from China to Vietnam. The escalating trade tensions between the two countries, coupled with increasing tariffs and export controls, have created a challenging environment for tech companies reliant on Chinese manufacturing. As a result, many manufacturers have started diversifying their supply chains by moving production to Vietnam.

Vietnam stock market shows some positive signals thanks to the improvement in FDI and the expansion of retail sales. FDI has increased since May, indicating a recovery in inflows as global businesses expanded their production capacities. Additionally, retail sales have witnessed growth, driven mainly by the influx of Chinese tourists following the reopening of tourism. We expect the VNIndex may reach 1,300-1,350 pts in 2H23.

The escalating US inventory-sales ratio will likely have adverse effects on US import demand, subsequently impacting the export performance of other countries, including Vietnam. The higher the inventory-sales buildup, the lower the US import orders from abroad, which in turn dampens the export growth of trading partners. Given Vietnam's dependence on the US as a major importer, the negative relationship between the US inventory-sales ratio and Vietnam's export is of particular concern. Monitoring the US inventory-sales ratio becomes crucial for assessing its potential impact on Vietnam's export-driven economy.

The Chinese economy has made a rebound in 2023, with major economic indicators seeing steady expansion, offering the latest evidence that the world's second-largest economy is set to secure a powerful recovery this year. China's GDP grew by 4.5% in the first quarter of 2023, 0.5% higher than market expectations. Notably, it marked the fastest pace of growth since the first quarter of 2022, indicating that China’s economic recovery is picking up steam

Indicators in May seem to characterize a turnaround in Vietnam’s economy when export and production activities experienced significant improvements. In addition, domestic consumption sustains its strong growth with well-controlled inflation, adding confidence about the bright economic picture soon. May also reveals a better situation in foreign investment when the global rate hike seems to step into the end phase.