Imports outpaces exports in first six months

Exports in the first six months of 2010 increased moderately by 15.7 percent but imports rose by 29.4 percent compared to the same period of 2009, reaching $38.8 billion.

According to statistics released in the preliminary conference for industrial production and trade in the first six months, held on July 6 by Ministry of Industry and Trade, in the first two quarters, exports have reached $32.12 billion in turnover; up by 15.7 percent compared to the same period of 2009, accounting for 53 percent of the turnover target assigned by the government.

Industrial goods take the lead in exports

Regarding export items, products from processing industry accounted for the biggest proportion of the export turnover (66.8 percent), equivalent to $21.47 billion, up by 23.7 percent compared to the same period of last year.

In particular, the main export items of Vietnam such as computers; electronic products and components; wood and wooden products; garment and textile products and plastic products achieved growth rates of 31.4 percent; 32.5 percent; 17.2 percent; and 25.2 percent, respectively. Chemical, power and power cables, and rubber products also have very impressive growths.

Ministry of Industry and Trade said that in the recent time, the strong growths of products from processing industry indicate not only the growth of the industrial production, but also the positive structure shift.

In the second place is the group of agricultural, forestry and fishery products, which account for 20.5 percent, reaching $6.6 billion. In the same period of 2009, this group accounted for 22 percent.

The main reason that lead to this situation was due to the reduction in exports of numbers of products, such as cassava and cassava products (down by 51.4 percent); coffee (down by 11.8 percent) and rubber (down by 6.2 percent), etc. Category of fuel and minerals in the first six months account for just 12.4 percent, down by three percent compared to the same period of last year, reaching $4 billion in turnover.

Although exports of many items have reduced, the significant increase in export prices thanks to the recovery of the global economy has helped create a higher turnover in the first six months, compared to the same period of 2009.

Rise in prices has resulted in a rise of $473 million in turnover of agricultural, forestry and fishery products. Minerals exports also went up by $1.15 billion in turnover, due to the rise in prices. For the two groups together, price increases have helped export value increase by $1.63 billion.

Regarding export markets, most of Vietnam markets for exports have had significant growth rate over the same period of last year. In particular, Asian market increased by 33.8 percent, Oceanian market by nearly 34 percent, American market by 21.2 percent. Only European market fell by 10 percent over the same period of last year.

Imports still outpaces exports

While exports rose up by only 15.7 percent, imports went up by 29.4 percent compared to the same period of 2009, reaching $38.8 billion. Thus, the trade deficit of the first two quarters is still about $6.7 billion, equivalent to 20.9 percent of the total export value.

The import of raw materials and machines is for export purposes in the near future, thus it should not be a matter of concern.

In addition, import price of numbers of raw materials have risen up considerably, while the increase of export prices has been slower.

Until the end of the year, if there are no significant changes, the target of six percent export growth is achievable. For industrial production, since it has increased by 13.6 percent in the first six months, the growth rate for the whole year could exceed the plan by 12 percent and trade deficit will remain at 20 percent over the export value.

Nevertheless, minister of Industry and Trade Vu Huy Hoang has not been very optimistic on this situation. In the short term, businesses still have to face a number of difficulties including the unstable power supply. Dao Van Hung, chair of Vietnam Electricity Group (EVN) also acknowledged that the hydro graphic situation is still very complex.
Drought may occur.

The minister also expressed his concern about the costs of inputs for production, which may continue rising faster than the increase in sales prices. This will make it difficult for firms in balancing finance in general and foreign currency in particular. That will also enlarge the gap between exports and imports.

Furthermore, a number of export products of Vietnam may have to cope with unpredictable changes due to the trade protection policies of some current major importing markets such as the EU, the US, etc.

Tags: Vietnam exports, Vietnam trade