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2009 deficit seen halving as imports fall
The trade deficit will fall by half this year to around US$9.15 billion as imports decline, the Ministry of Trade and Industry forecast Thursday.
Exports are expected to rise 13 percent from 2008 to $70.85 billion while imports would fall 0.9 percent from last year to $80 billion, the ministry's Trade Promotion Department said in a report released at the annual VietnamExpo trade fair in Hanoi.
Earlier this week, the World Bank forecast exports to rise only 5 percent to $65.8 billion as the global economic downturn reduced consumer demand, and imports to dip 2.5 percent to $78.4 billion.
"Export markets have contracted significantly. Import demand and payment ability in the main markets have shown signs of slowing down," the report said.
The report also underlined increased competition from other Asian exporters, especially in the agricultural, fisheries, garment and electronics sectors.
The economy grew an estimated 3.1 percent in the first quarter from a year earlier, the slowest pace in at least a decade.
The government estimated on March 24 that Vietnam had a trade surplus of $1.65 billion in the first quarter of 2009, with exports up 2.4 percent from the same three-month period last year and imports down 45 percent.
Export of precious metals and gem stones, a category that consists mainly of gold, climbed to a record $2.29 billion in the January-March period after the central bank relaxed a ban last month to allow some traders to re-export gold.
Short-lived surplus
However, Vietnam would probably post a trade deficit in the second quarter amid slowing gold exports, Sacombank Securities Inc. said.
Exports may fall to an average of about $4 billion a month, after totaling $13.48 billion in the first quarter, analysts including Le Ba Hoang Quang, Sacombank Securities’ head of research, said in a monthly note to clients dated Wednesday.
“The quantity of gold now available for export has greatly depleted,” Quang said. “With $2.29 billion, gold accounted for a considerable portion of exports and brought in all the surplus.”
Without gold, exports in the first quarter would have fallen 15 percent from a year earlier to $11.2 billion, according to Sacombank Securities. Shipments of other goods are set to weaken amid the global recession, especially as local producers execute orders contracted earlier, it said.
The recent surge in gold exports was attributed mostly to the large volumes imported at low prices in 2008, the Ho Chi Minh City-based brokerage said.
“It is very difficult” for gold shipments to sustain recent levels since a significant amount of the metal has already been exported, Quang said. Gold has also always been considered a “means of preserving wealth” in Vietnam he said.
Fairly stable
Imports would not fluctuate as much because a weaker currency would make consumer-goods imports costlier, while local manufacturers would buy fewer raw materials amid declining demand, Sacombank Securities said.
Faltering investment from both foreign and local investors would reduce orders for equipment and machinery, and falling commodity prices would also cool imports, it said.
“Imports are expected to stay fairly stable for the rest of 2009 except consumer goods, since they have become relatively more expensive for Vietnamese with the depreciation of the dong by 2 percent,” the brokerage said.
The State Bank of Vietnam on March 24 widened the dong’s trading band to 5 percent on either side of a daily fixing rate from 3 percent, allowing the currency to slide further from its daily reference rate against the dollar.
Sacombank Securities is the brokerage unit of Saigon Thuong Tin Commercial Joint-Stock Bank, the sixth-biggest company on the Ho Chi Minh Stock Exchange by market value.
thanhnien, Reuters, Bloomberg
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