Viet Nam anticipates trade deficit in 2015
Viet Nam anticipates trade deficit in 2015
After three consecutive years of trade surplus, Viet Nam will likely experience a trade deficit next year, the Ministry of Industry and Trade predicted at a meeting last Monday.
The ministry anticipated export revenues next year to increase by roughly 10 per cent to US$163 billion but expected import payments to rise, causing a trade deficit of $6 billion to $8 billion or five per cent of export revenues.
Deputy Industry and Trade Minister Do Thang Hai attributed the country's trade surplus in previous years to the increase in exports from foreign direct investment (FDI) companies.
But this will change next year as exports from these companies have gradually declined and are not expected to increase by as much as before, according to Hai.
Figures from the ministry showed that export growth rates of FDI companies have fallen to 12 per cent this year, from 22 per cent last year and 31 per cent in 2012.
Rapid and consecutive decreasing rates have shown that the production capacity of FDI companies has gradually declined.
Key exports of FDI companies such as mobile and electronic components are not expected to increase sharply next year because of the gradual decline in previous years.
Exports of mobile and electronic components, for example, are expected to increase by only 6 per cent this year compared with 43 per cent last year and 120 per cent in 2012.
The global economy is also expected to further improve next year while Viet Nam's prospects of attracting FDI are likewise expected to improve in the wake of numerous trade agreements that would likely be signed next year.
These include the Viet Nam-European Union Free Trade Agreement, Viet Nam-South Korea Free Trade Agreement, Viet Nam-Customs Union of Russia, Belarus, and Kazakhstan Free Trade Agreement and ASEAN Economic Community and Trans-Pacific Partnership Agreement.
Under these agreements, Viet Nam is expected to become more attractive to foreign investors because of a series of tax exemptions, as well as open investment and service policies.
New FDI flows to Viet Nam would lead to higher demand for equipment and component imports similar to the time when Viet Nam joined the World Trade Organisation, Hai said, adding that the increase in imports next year would reduce the country's trade surplus.
With a trade surplus of $1.9 billion in the first 10 months of 2014, this year is expected to be the third year that the country has achieved a trade surplus. Viet Nam achieved a trade surplus of $780 million in 2012 and $863 million in 2013.
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