Vietnam's trade may be significantly hit by Russia-Ukraine conflict

Textiles account for 10.5 per cent of Vietnamese exports to Russia.

According to the European-American market department of Vietnam’s ministry of industry and trade, both Russia and Ukraine are traditional and important trading partners of Vietnam in the Eurasia region. Russia ranks first and Ukraine sixth in terms of trade turnover.

If the Russia-Ukraine conflict continues, it will have a serious impact on bilateral trade between Vietnam and the two countries, according to a report in a popular Vietnamese media outlet.

In the short term, the crisis will affect goods, supply and demand and prices. The conflict is one of the main reasons for increasing prices of a number of fuels and raw materials for production and consumption.

Regarding the payment of commercial contracts, for Russia, the US and Western countries have imposed a series of sanctions targeting the banking and financial system of Russia, which will affect the settlement of many contracts using the US dollar as payment currency.

In addition, as the ruble exchange rate has fluctuated, some Russian importers have proposed suspending payment for two to three weeks to wait for the situation to stabilise.

Some shipping lines have refused to accept orders to transport goods from Vietnam to Russia. Freight rates will continue to soar along with shipping delays that will severely affect trade in goods.

In addition, due to an air embargo, airlines will have to choose longer routes, causing increased costs and pressure on the global logistics transport system and the price of goods.

Experts, however, said that it is too early to assess the medium and long-term impacts of the Russia-Ukraine crisis on trade relations with Vietnam.

Bilateral trade turnover between Vietnam and Russia in 2021 reached $5.5 billion, up by 13.8 per cent compared to the 2020 figure. Of that, exports were worth $3.2 billion, up by 13.2 per cent, and imports $2.3 billion, up by 14.9 per cent.

Vietnam's primary exports to Russia include phones and components (accounting for 33 per cent), computers and electronic products (13 per cent), textiles (10.5 per cent), coffee (5.4 per cent) and seafood (5.1 per cent).

Vietnam-Ukraine trade turnover in 2021 was estimated at $720.5 million, up by 50.6 per cent compared to the 2020 figure. Vietnam’s export revenue from Ukraine last year was $344.6 million, up by 21 per cent, and import turnover $375.8 million, up by 94.2 per cent.

The main export items of Vietnam to this market include phones and components (49 per cent), seafood (8.3 per cent), machinery, equipment and spare parts (5.4 per cent), footwear (4.87 per cent), and computers and electronic products (4.84 per cent).

Fibre2Fashion News Desk (DS)