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Trade balance swings to deficit; exports slip
Vietnam’s trade balance swung into deficit through the first five months of the year, as lower commodity prices cut into export receipts and the pace of import contraction eased.
The trade shortfall was US$1.13 billion through May, compared with a $372 million surplus in the four months to April, according to estimates released Monday by the General Statistics Office in Hanoi. Exports fell 7 percent to $22.86 billion during the period, while imports slipped 37 percent to $23.99 billion from a year earlier.
Record trade deficits in the past have fed concerns about the stability of the dong, though the shortfall through May this year narrowed 92 percent from the $13.55 billion gap in the same period in 2008. The move toward a deficit was anticipated in reports over the last month by banks including Citigroup Inc. and HSBC Holdings Plc.
“Deficits are here to stay,” said Ken Peng, a Beijing-based economist at Citigroup. “Vietnam’s overall trade position is still weak, and will continue to be for some time to come.”
Garment exports fell 2 percent through May to $3.24 billion, while footwear shipments declined 10 percent to $1.64 billion.
“There’s nothing wrong with Vietnam’s reliance so far on apparel and footwear” shipments, Nobel Prize-winning economist Paul Krugman said May 21 at a seminar in Ho Chi Minh City. “You don’t start by producing high-tech, highly sophisticated goods. You start with the things where you have an advantage.”
Oil, coffee
Crude oil shipments dropped 44 percent by value to $2.57 billion, as the average global price of crude slumped 55 percent compared with the same period a year earlier. The lower prices outweighed a 23 percent increase in oil output to 6.95 million tons for Vietnam, Southeast Asia’s third-biggest crude oil producer.
Coffee exports declined 12 percent by value to $963 million. Vietnam is the world’s second-biggest coffee producer. The average export price of robusta coffee dropped 29 percent between October 2008 and April this year, according to a report dated May 15 from the agricultural attache’s office at the US Embassy in Hanoi.
The lower coffee prices have “been attributed to the effects of the global financial crisis on commodity prices,” the report said. “Local coffee traders are hopeful that export prices will rise in the second half of the 2008/2009 market year, given continued strong global demand.”
Gold sales
Vietnam’s export performance was also dampened by the virtual end to the shipment of precious stones and metals. Almost all Vietnamese gold exports result from bullion obtained through past imports rather than from local output.
While overall exports in the category through May totaled $2.61 billion compared with negligible figures a year ago, only $60 million worth of estimated shipments of precious stones and metals were made in May alone.
On the import side, the 37 percent decline through May was down from a revised 40 percent fall through April. Government stimulus spending would contribute to a slowing of the pace of import contraction, HSBC said this month.
“For imports, we think the biggest year-on-year declines are now behind us,” wrote Prakriti Sofat, an economist at HSBC in Singapore, in a note dated May 6. “Vietnam remains in the early stages of development, meaning that the country will continue to import huge quantities of capital/intermediate goods.”
The slide in imports was led by machinery, purchases of which declined 24 percent to $4.44 billion. Imports of machinery are largely related to disbursements of foreign direct investment, the UK-listed fund Vietnam Holding Ltd. said this month.
Purchases of petroleum products from abroad fell 5 percent by volume and 55 percent by value to $2.22 billion, while steel imports tumbled 61 percent to $1.64 billion.
thanhnien, bloomberg
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