Returning trade deficit raises concerns
Returning trade deficit raises concerns
After eight months of a trade surplus, Vietnam saw an excess of imports over exports again in September and October, due to a high volume of luxury imports.
The $1.7 billion trade surplus, equal to 1.8 percent of export turnover, in the first eight months of the year was described as a “great achievement”, but it has not been sustainable.
Vietnam saw an excess of imports over exports again in September ($600 million) and October ($400 million).
While export turnover fell ($12.6 billion in September, down by 5 percent from August), import turnover increased steadily ($12.2 billion in August, $13.2 billion in September and $13.6 billion in October).
While Vietnam’s exports in textile and garment products were stable, exports of crude oil and footwear, two of the three major export items, have fallen since June.
In September and October, Vietnam exported only $2 billion worth of textiles and garments a month, lower than the $2.14 billion in July and August. Meanwhile, the footwear export turnover dropped from $940 million a month in June-August to $770 million a month in September and October. The crude oil export turnover also plummeted, from $715 million to $470 million.
Analysts pointed out that the most worrying problem is that Vietnam continues importing more goods from China than exports, even though it has tried to ease reliance on Chinese imports.
After China illegally placed an oil rig in Vietnamese territory in May, Vietnamese businesses were told to look for other supply sources instead of China to minimize risks. However, finding other suppliers cannot be accomplished overnight.
The highest trade deficit is with China, with a deficit of $23.1 billion in the first 10 months of the year, double the trade deficit with South Korea.
A banker noted that the stronger Vietnam dong against some hard currencies of important trade partners, such as the euro and the Japanese yen, could be the cause.
Since the US dollar has been appreciating in the world market, and the Vietnam dong is bound to the US dollar, the dong has also appreciated.
Thoi bao Kinh te Saigon newspaper quoted sources as saying that the dong appreciated by 3.1 percent in September over the month before and 4.5 percent in October against the euro.
The strong dong made Vietnamese export products less competitive than products from other exporters.
However, the banker attributed the reason to the increasingly high number of luxury imports.
Turnover for car imports in the first 10 months of the year reached $2.8 billion, an increase of 48 percent over the same period last year. This included $1.18 billion worth of car imports under the mode of complete built unit (CBU).
vietnamnet
