Trade deficit persists as imports surge 32%

The nation’s import growth rate during the first four months of the year was much higher than the growth of exports, leading to a growing trade deficit, according to the General Statistic Office.

The first four months reached an export turnover of US$14.5 billion, an annual increase of 22 per cent, the Office said. Of which, the foreign invested sector recorded $8.1 billion in export turnover, and the domestic sector made $6.42 billion, a significant increase of nearly 28 per cent.

Of the key export products, crude oil continued earning the highest export turnover of $2.36 billion although this product has decreased year-on-year in both quality and value.

Garments, despite the difficulties in the US market which accounts for as much as 50 per cent of the total export value, kept its stable growth rate of 31.7 per cent with turnover of $2.2 billion.

The domestic garment industry is fighting against a monitoring system set up by the US Department of Commerce, which may severely affect Vietnamese garment exports in the next months.

Footwear ranked third in export turnover with $1.2 billion, an annual increase of 11 per cent. The footwear sector is becoming more and more competitive due to the significant tax decreases for input products brought about by the nation’s WTO membership.

Seafood, one of the products most expected to record a high export turnover increase in 2007, has export turnover of $1.04 billion, a year-on-year increase of 20.4 per cent.

Coffee recorded the highest growth rate of 134.8 per cent thanks to high prices in contracts from the September 2006 to March 2007 crop.

The nation’s four biggest exporting markets now are the EU, the US, Japan and China, of which the US market imported more than $2 billion from Viet Nam with the main imported products being garments, footwear and wood products.

Import marked a huge year-on-year increase of 32.8 per cent with turnover of $16.8 billion. Of which, the domestic sector imported $10.7 billion, an increase of 35.3 per cent and the foreign invested sector imported $6.1 billion, an increase of 28.7 per cent.

The high import growth rate is attributed to several factors, according to Vo Tri Thanh from the Central Institute for Economic Management.

They include the increase in foreign investment in Viet Nam, the high growth rate in GDP and the stable exchange rate of dong against theUS dollar.

Importation of products used in production accounted for a large proportion of the trade deficit, including machinery ($2.9 billion, an annual increase of 52.7 per cent), petroleum (more than $2 billion), and raw materials for the construction industry.

The high growth rate in import turnover has brought a huge increase of 72 per cent in the nation’s trade deficit.

Thanh said that the increase in the trade deficit, up to now, is not worrying as Viet Nam still has a surplus in the balance of trade. The increase is suitable with the high growth rate of the country, he said.

Source: VNS