Trade deficit forecast at $14b in 2011

Vietnam’s trade gap in 2011 is forecasted to be $14 billion, lower than 18 percent of the total import spending and maybe lower than the government’s target ($14.6 billion), according to the Ministry of Planning and Investment (MPI).

The ministry said the country’s total export turnover in 2011 would be about $78 billion, up over 10 percent against 2010′s. Of which, exports of foreign direct investment (FDI) area (excluding crude oil) would be about $38 billion, accounting for 48.7 percent of the total export turnover and up 13 percent year-on-year.

As forecasted, the total import spending in 2011 would be $92 billion, rising over 11 percent versus 2010. Of which, imports of FDI firms would be about $41.5 billion, accounting for 45 percent of the total import spending and up 15.3 percent year-on-year. Basing on that foundation, the country’s trade deficit would be $14 billion.

The trade gap of $14 billion would be only equal to this year’s trade deficit plus trade gap of one more month (in 2010, the trade deficit was $12.4 billion/12 months), still being considered a high level.

In 2010, the trade deficit was equal to 17.3 percent of the total import value, but the trade deficit target next year of up to 18 percent would be higher. Meanwhile, the world price still tends to increase and the country’s inflation in 2010 was up to 11.87 percent along with issues relating to interest rate and FX rate are still instable.

A few months ago, National Assembly’s Economic Committee warned that Vietnam needs to have measures to lower inflation (about $13.5 billion) to ensure the current payment balance. Meanwhile, the state’s foreign currency reserve is not likely to increase next year, the trade gap would cause the imbalance in demand and supply of US dollar, putting pressure on FX rate and causing instability of macro economy. – Vietbiz24

Tags: Vietnam trade, Vietnam trade deficit 2011

Posted by VBN on Dec 30 2010. Filed under Import-Export. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry