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UK bank remains upbeat about Vietnam’s trade deficit
With Vietnam’s imports dipping and exports remaining strong, the government’s full-year trade deficit target of US$20 billion could be achieved, Standard Chartered Bank said in its August report.
The deficit for the first seven months is $15 billion.
But according to the General Statistics Office (GSO), it was less than $1 billion in both June and July, compared with a monthly average of $2.7 billion between January and May.
Exports were more than $6 billion in each of June and July.
The GSO said for the first time since November 2006, year-on-year export growth in June and July – 54 percent and 46 percent respectively – exceeded import growth.
The British bank’s report said considering concerns over the global economic outlook, Vietnam’s export performance, particularly manufacturing exports, was impressive.
According to the GSO, in the first seven months exports of textile and garments grew by 19.7 percent, footwear by 18 percent and computer and electrical components by 30 percent.
Higher tariffs on imported cars have also resulted in falling auto imports.
But the biggest impact on imports came from steel.
The GSO said while imports had topped $1 billion in March, possibly because firms were stockpiling, it dropped to $430 million in both June and July.
This alone reduced the trade deficit by $600 million per month.
Growth vs. inflation
The report said the 5.8 percent economic growth in the second quarter, the lowest since the first quarter of 2000, could prompt policymakers to be more cautious about curbing growth to fight inflation, which it predicted to stay above 20 percent until the first quarter of next year.
But it said only part of the economy seems to be slowing down according to GSO data, namely mining and quarrying, construction, and real estate.
Manufacturing and services continue to grow steadily, while retail sales growth in real terms – that is, adjusted for inflation – also managed to achieve a high single digit figure in both June and July.
Transport volumes also suggested the economy remains strong.
The GSO said freight carried, measured in ton-kilometers, grew 67 percent in the first seven months, thanks to a surge in maritime transport, a reflection of Vietnam’s booming trade.
The bank’s report said this data suggested that the interest rate hikes in April and May have not had a strong impact on the economy.
While the authorities may hesitate to hike rates again, the bank called for higher interest rates to hold on to capital, especially when real interest rates are still negative.
Thanhnien
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