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Export rise helps secure Q1 trade surplus
The trade balance swung into surplus in the first quarter as the country managed to post an increase in exports amid the global recession.
The country reported a trade surplus of US$1.65 billion (see box), compared with a deficit of $8.35 billion in the same three-month period a year earlier, the General Statistics Office said in Hanoi Tuesday. Exports rose 2 percent to $13.48 billion, while imports tumbled 45 percent to $11.83 billion.
The trade surplus is a reversal from last year, when a widening deficit sparked concerns the currency would weaken. Steady garments shipments and surging rice sales, aided by cheaper prices compared to Thailand’s, are countering declining footwear and furniture exports.
“The bulk of Vietnam’s exports are low-end,” said Peter Ryder, Hanoi-based chief executive of Indochina Capital Corp. “That helps cushion exports from a sharp fall.”
Exports have also been given a boost by shipments of precious stones and metals, which surged to $2.29 billion from negligible levels a year ago.
Much of the gold is “coming out from under mattresses, as part of a $9- 10 billion hoard – mostly unregistered – that is thought to have accumulated in the country over the years,” Ho Chi Minh City-based fund managers Dragon Capital said in a note this month to investors.
‘Buying cheap’
“In Vietnam, there is a sizeable gap between domestic physical and international cash-settlement prices” for gold, Dragon said. “At present the difference is in favor of the latter and the government has recently allowed export. So bullion operators are buying cheap at home to sell expensively abroad.”
A slower pace of inflation is allowing households to sell gold stocks built up as prices galloped last year, said Prakriti Sofat, an economist at HSBC Holdings Plc. in Singapore. Vietnam’s inflation rate fell to 11.3 percent in March, down from a peak of 28.3 percent last year.
But the supply of gold for reshipment abroad is running low, hurting the outlook for exports in the second quarter, Vietnam News reported Tuesday.
Garment exports were little changed from a year ago at $1.9 billion, according to Tuesday’s figures. Focus on the lower end of the garment export market is benefiting the country’s apparel shipments amid a worldwide slump in the industry, Vietnam News reported this month.
Rice, crude oil
Garment shipments that are “unchanged from last year is a pretty good performance in light of the international environment,” said Ray Mallon, an independent economist who has been based in Hanoi since 1991.
Rice also helped drive the figures, with shipments from the world’s second-biggest exporter last year jumping 76 percent by value to $785 million. Vietnamese rice exports will probably rise 12 percent by volume for the year to a record 5.2 million tons, the US Foreign Agricultural Service predicted this month.
Vietnam’s 25 percent broken-grain rice, its cheapest export variety, averaged $393 per ton in February, compared with $480 per ton for Thailand’s equivalent, according to the Food & Agriculture Organization.
Crude oil shipments dropped 46 percent by value to $1.43 billion, as the average price of crude oil fell 56 percent over the period. By volume, crude exports rose 22 percent. ConocoPhillips, Nippon Oil Corp., Soco International Plc. and Talisman
Energy Inc. all began production last year from new oil fields in which they hold shares.
Asian competitors
“It is impressive that even if you exclude gold, Vietnam’s export trajectory appears to be better than other countries around the region,” said Spencer White, a director of Thien Viet Securities in HCMC. “But the likely cost of those revenue numbers is dramatically depleted margins, which you may see in corporate results for the first and second quarter.”
On the import side, purchases of foreign machinery and equipment slumped 30 percent to $2.38 billion, while purchases of petroleum products tumbled 60 percent by value to $1.13 billion, according to Tuesday’s report.
The opening last month of the first oil refinery should “help Vietnam wean its dependence off the import of refined petroleum,” DWS Vietnam Fund Ltd. said in a note last week. The refinery is designed to meet about one-third of fuel demand next year.
“This will help further improve Vietnam’s trade-balance dynamics,” DWS Vietnam said. “Investors will do well to remember that the global surge in commodities’ prices in the first half of 2008 led to Vietnam’s high inflation and widening trade deficit.”
Bloomberg, thanhnien
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