June trade deficit will exceed $1 billion

Vietnam’s total trade deficit in the first half of 2010 is projected to be $6.7 billion, double last year’s level, meaning that Vietnam has imported 21 percent more goods than it has exported.

In particular, the nation continues to sustain a substantial deficit in trade with China, the Republic of Korea, Taiwan, Thailand and Singapore.

The Ministry of Industry and Trade (MoIT) has calculated that only by controlling trade deficits at around $12 billion for the rest of the year can the nation meet its 2010 target. The National Assembly has instructed the Government to hold the trade deficit to 20 percent of export turnover for the year.

The General Statistics Office reported that Vietnam’s exports in June will reach about $6 billion, some $300 million less than May. Meanwhile, imports rose slightly to $7.2 billion. Thus the trade deficit in June rose to $1.2 billion, after falling to $871 million in May.

The largest import item by value in June is cotton, projected at around $329 million, up 250 percent from the previous year. Imports of non-ferrous metals doubled. Imports of cars, motorbikes and fertilizer fell.

Vietnam’s total exports in 2010’s first half will total over $32 billion, a 16 percent year over year rise, reported the Ministry of Planning and Investment (MPI). The global economic rebound and rises in world prices are attributable to the surge in export values.

Growth leaders include electric wire and cables (up by almost 87 percent), machines and equipment (up 68 percent), pepper (up 46 percent), and wood and wooden furniture (32.5 percent).

By the end of June, nine hard currency earners were members of the one billion dollar club, namely seafood, rice, crude oil, wooden furniture, apparel, footwear, machines and equipment, electronic appliances and computers, and precious stones and metals.

The United States remains the biggest market, accounting for 20 percent Vietnam’s exports. ASEAN nations collectively took 17 percent and the European Union, 16 percent.

The five markets where Vietnam has enjoyed the largest trade surplus in the first half of the year are the US, the Philippines, Australia, Switzerland and Cambodia.

Judging from the current positive trend, economists say the yearly export target of some US$63 billion is within reach. Much of the surge in imports reflects imports of raw materials by firms that will later export finished goods.

Even so, the $320 million month-over-month increase in the trade deficit was surprisingly large.

Tags: Vietnam trade, Vietnam trade deficit 2010