Vietnam’s export sector, a cornerstone of its rapidly growing economy, faced a notable setback in January 2025, with total export turnover dropping by 7 per cent compared to the previous month. According to the Ministry of Industry and Trade, the country’s total import-export turnover for the month was estimated at $63.15 billion, a decline of nearly 11 per cent from December 2024 and 4 per cent year-on-year. This downturn, attributed largely to fewer working days in January, raises concerns about Vietnam’s economic resilience amid global market fluctuations and domestic structural challenges.
The United States, Vietnam’s largest export market, recorded a trade value of $10 billion in January, yet this figure represents a 2.1 per cent decrease compared to the same period in 2024. Key exports to the US, including electronics, textiles, footwear, and agricultural products, have historically driven Vietnam’s trade surplus, but the recent dip suggests softening demand or shifting trade dynamics. In contrast, exports to China, Vietnam’s second-largest market, surged by an impressive 25.2 per cent to $4.6 billion, offering a rare bright spot in an otherwise gloomy trade report.
This article explores the factors behind Vietnam’s export decline, the implications for its economy, and the potential strategies to mitigate these challenges. With the foreign-invested sector dominating 71 per cent of exports, compared to the domestic sector’s 29 per cent, questions also arise about the balance of economic benefits and long-term sustainability. 
A Broad Decline Across Sectors
The January 2025 trade data reveals a broad-based decline across Vietnam’s major export sectors. Agriculture, forestry, and fisheries exports fell by 8.7 per cent year-on-year, while processed industrial goods, a key driver of Vietnam’s manufacturing boom, decreased by 3.4 per cent. The fuels and minerals sector saw the steepest drop, plummeting by 35.5 per cent, reflecting both global price volatility and reduced production or demand.
Despite these declines, certain product categories showed resilience. Iron and steel products recorded a 14.1 per cent increase in export value, while computers, electronic products, and components grew by 13.3 per cent. These gains, however, were insufficient to offset the broader downturn. On the import side, Vietnam’s total import value reached $30.06 billion, down nearly 3 per cent year-on-year, with China remaining the largest supplier at $11.6 billion, albeit with a 2.2 per cent decline from January 2024.
The Ministry of Industry and Trade highlighted the reduced number of working days in January 2025 as the primary reason for the trade slump. January often includes public holidays, such as the Lunar New Year (Tết), which can disrupt production and shipping schedules. While this explanation holds merit, it does not fully account for the year-on-year declines, suggesting deeper structural or external factors at play.
Global Market Dynamics and Vietnam’s Position
Vietnam’s export performance is intricately tied to global economic conditions, particularly in its major markets like the US and China. The slight decline in exports to the US may reflect broader economic trends, such as inflationary pressures or reduced consumer spending in the American market. As a hub for electronics and textiles, Vietnam competes with other low-cost manufacturing nations, and any shift in global supply chains—whether due to trade policies or geopolitical tensions—could impact its market share.
The robust growth in exports to China, however, signals a potential pivot. With a 25.2 per cent surge, Vietnam appears to be capitalizing on China’s demand for intermediate goods and components, likely fueled by China’s own manufacturing needs. This trend could offer a buffer against losses in other markets, but it also raises concerns about over-reliance on a single trading partner, especially given past tensions over trade imbalances and border issues in the South China Sea.
Beyond bilateral trade dynamics, Vietnam’s export structure reveals a heavy dependence on foreign-invested enterprises (FIEs), which account for 71 per cent of total exports. While FIEs, often multinational corporations, bring capital and technology, their dominance means that much of the economic value—profits and intellectual property—may flow out of Vietnam rather than benefiting local firms. The domestic sector’s 29 per cent share, though significant, underscores the need for policies to bolster local industries and reduce this disparity.
Domestic Challenges and Structural Issues
Beyond external market conditions, Vietnam faces internal hurdles that may exacerbate its export challenges. Infrastructure bottlenecks, particularly in logistics and port capacity, remain a persistent issue despite investments in facilities like the Gemalink Deep-sea Port in Ba Rịa-Vung Tau province. Congestion and inefficiencies can delay shipments, raising costs for exporters and diminishing competitiveness.
Labour productivity is another concern. While Vietnam benefits from a young, relatively low-cost workforce, upskilling and training are essential to meet the demands of high-value industries like electronics and advanced manufacturing. Without sustained investment in education and vocational programmes, the country risks losing ground to competitors like Indonesia or Bangladesh, which are also vying for foreign investment in manufacturing.
Energy supply and sustainability also loom large. The steep decline in fuels and minerals exports (down 35.5 per cent) may reflect not only global price drops but also domestic production constraints or policy shifts towards renewable energy. Vietnam has committed to net-zero emissions by 2050, but balancing industrial growth with environmental goals requires careful planning. Power shortages, as seen in recent years, could further disrupt manufacturing if not addressed through infrastructure upgrades and diversified energy sources.
Policy Implications and Future Outlook
The January 2025 trade figures serve as a wake-up call for Vietnamese policymakers. While the immediate cause—fewer working days—may be temporary, the broader trends of sectoral declines and market-specific challenges warrant strategic responses. Diversifying export markets beyond the US and China should be a priority, with greater focus on emerging economies in Africa, Latin America, and South Asia, where demand for affordable goods is growing.
Strengthening the domestic sector is equally critical. Incentives for local small- and medium-sized enterprises (SMEs), such as tax breaks, access to credit, and technology transfer programmes, could help balance the influence of FIEs. At the same time, streamlining bureaucratic processes and improving ease of doing business would encourage both local and foreign investment.
On the infrastructure front, accelerating projects like the North-South Expressway and expanding deep-sea port capacities could alleviate logistics bottlenecks. Partnerships with private firms, as seen with Gemalink Port, demonstrate the potential for public-private collaboration to drive efficiency, but these must be scaled up to meet national demand.
Looking ahead, Vietnam’s economic outlook remains cautiously optimistic. The double-digit growth in specific export categories like electronics and steel suggests areas of strength that can be leveraged. If global demand stabilizes, particularly in the US, Vietnam could recover lost ground. However, this hinges on proactive government policies and the ability to navigate geopolitical uncertainties, such as US-China trade tensions, which could indirectly affect Vietnam as a manufacturing hub.
Speculative analysis suggests that if Vietnam successfully diversifies its markets and boosts domestic industry, export turnover could rebound by mid-2025. However, these projections remain unconfirmed, and there is no current evidence to guarantee such outcomes. External shocks, such as a global recession or supply chain disruptions, could further complicate recovery efforts.
Conclusion: Navigating a Complex Economic Landscape
Vietnam’s export decline in January 2025 underscores the fragility of its trade-dependent economy in the face of global and domestic challenges. While the immediate cause may be tied to seasonal factors, the broader declines across agriculture, industry, and minerals signal the need for structural reforms and strategic diversification. The surge in exports to China offers a glimmer of hope, but over-reliance on any single market carries risks.
As a key player in South East Asia’s economic landscape, Vietnam must balance the benefits of foreign investment with the imperative to empower local industries. Infrastructure upgrades, workforce development, and market diversification will be crucial to sustaining long-term growth. For now, the January figures serve as a reminder that economic success is not guaranteed, even for a nation as dynamic as Vietnam. Policymakers and industry leaders alike must act decisively to ensure that temporary setbacks do not become enduring obstacles.
