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Vietnam import fall slows; Trade gap is $6.5 billion
Vietnam’s import decline slowed, indicating its economy is accelerating as companies buy machinery and steel from abroad to fuel production. The trade deficit narrowed.
Imports fell 25 percent through September from a year earlier to US$48.3 billion, according to preliminary figures released by the General Statistics Office in Hanoi Tuesday. The figure compares with a revised 29 percent drop through August.
The rate of decline in purchases from abroad has eased since peaking with a 45 percent tumble in the first three months of 2009. Vietnam’s economy expanded 3.1 percent in the first quarter, the slowest pace on record. Growth accelerated to 4.5 percent in the second quarter, and may have reached 5.8 percent in the third, VietnamNet reported Tuesday.
“Imports in Vietnam are directly linked to economic growth,” said Alain Cany, Ho Chi Minh City-based chairman of the European Chamber of Commerce in Vietnam. “If the import figures are getting closer to normal, it is good news because it means that growth is getting closer to normal.”
Exports fell 14 percent through September to $41.7 billion, less than a revised 15 percent drop through August, according to Tuesday’s report. The trade deficit narrowed 59 percent to $6.54 billion from $15.84 billion in the same period a year earlier.
Resumption of plans
“The pace of decline in imports and exports has slowed noticeably,” DWS Vietnam Fund Ltd. said in a research note last week. “As more companies start resuming capital expenditure plans and spending on importing materials and equipment, we can expect to see imports slowly coming back to life.”
The trade balance has shifted into deficit after surpluses were recorded through April. Still, the level of the deficit is unlikely to return to the levels of 2008, when the country announced a record shortfall of about $17.5 billion.
“We look for better performances in non-oil exports, as Vietnam exploits its competitiveness and sees the fruits of recent industrial upgrading,” Joseph Lau, a Hong Kong-based economist at Credit Suisse Group AG, said in a note last week. “While trade and current-account deficits will persist, these are looking much healthier than last year.”
Exports were led by garments, shipments of which fell 1 percent to $6.73 billion. Vietnam’s low-cost manufacturing base has allowed exports of items such as garments to be more resilient than elsewhere in Asia, Ho Chi Minh City-based fund managers Dragon Capital said last month.
“April and May were very tough months, but in June a lot of orders started coming in, mainly from Europe and Latin America,” said John Marron, managing director of Midas Clothing Ltd. in Ho Chi Minh City. “People have been moving garment export production out of China, which is becoming more expensive while Vietnamese prices are stable.”
Crude oil shipments
Crude oil shipments slumped 46 percent by value to $4.77 billion, even while gaining 9 percent by volume. The average global price of crude oil is 50 percent lower so far this year than during the same period a year earlier.
Imports were led by purchases of machinery, which fell 15 percent to $8.33 billion. While steel imports dropped 36 percent by value to $3.82 billion, by volume purchases rose 1 percent to 7.31 million tons.
“Starting in July there were large imports of steel into Vietnam,” said Robert Santurbano, general manager of steel distributors Italinox Vietnam Co. in Hanoi. “A lot of it is speculative. Traders have been stocking a lot and hoping to sell for a markup.”
Vietnam may record a trade gap for the full year of about $11 billion, Thoi Bao Kinh Te Vietnam newspaper reported Sept. 23, citing an estimate from the Ministry of Trade and Industry.
“It makes sense for Vietnam to have some level of trade deficit,” said Cany of the European Chamber of Commerce. “We are comfortable with a full-year deficit of about $10 billion or $12 billion. But they have to watch carefully that it doesn’t go much beyond that.”
thanhnien, bloomberg
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