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Trade surplus plugs holes in dollar supply
A dramatic turnaround in the trade balance has eased concerns over a greenback shortage in the economy.
Vietnam has posted an aggregate trade surplus of $800 million over the first four months of 2009, a huge improvement against the trade deficit of $11.5 billion in the same period last year.
Nguyen Thi Mui, Academy of Finance’s Vice Rector said that this surplus had physically added greenback supply into the economy.
“We could interprete this data as a positive signal that the greenback supply-demand is well under control,” said Mui, who is also a member of the National Board of Monetary Policy Consultation.
In April, although the trade accounts recorded a deficit of $846 million, the surpluses from January through March have maintained the aggregate balance of the US dollars over the first four months.
A detailed breakdown shows that Vietnam’s major export commodities are feeling the pressure, with crude oil, fishing, coal and furniture exports all down. However, textile exports were up 2 per cent, rice shipments rose by nearly 45 per cent, cassava and bi-products by 155 per cent and tea by 15 per cent.
The key reason for this out-performance is burgeoning precious metals exports with $2.5 billion, up 4,080 per cent year-to-date or 1,600 per cent year-on-year.
Nguyen Thanh Truc, General Director of Jewelry Company under Agricultural and Rural Development Bank (Agribank) said the enormous rise in precious metal exports was due to the State Bank’s decision to allow gold traders to export in the first quarter of 2009.
Prakriti Sofat, HSBC’s Asian Economist said: “The boost to exports is not sustainable, as gold stocks are running down and overall exports are going to slip deeper into the red.”
However, although imports contracted by 41 per cent in the first four months of the year, compared with a rise of 70 per cent in the same period last year, adjusted month-on-month, imports rose by 45 per cent in April - the sharpest increase since November 2002.
Sofat said that continuous growth in imports should be expected through the rest of the year as exports increasingly feel the pressure and import growth shows more life as base effects become less favourable and the policy stimulus feeds through the economy.
“It should be noted that Vietnam remains in the early stages of development, meaning that the country needs to import large quantities of capital goods keeping it in structural deficit".
Overall for 2009 we expect the trade deficit to be $6 billion, equal to 6.7 per cent of Gross Domestic Product (GDP), far better than the shortfall of $17.5 billion last year,” said Sofat.
Nguyen Dai Lai, the State Bank’s Credit Information Centre vice-head, said the trade surplus meant that the current dollar shortage in the market was affected.
“The problem is that the exporters are hoarding greenbacks in anticipation of the Vietnam dong depreciating further against the dollar,” said Lai.
Amid the dollar-hoarding trend, the State Bank is considering forcing local exporters to sell a part of their dollar earnings at a compulsory ratio.
vietnamnet, vir
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