Vietnam BoP deficit forecast at $4Bln in 2010: government

Vietnam is forecast to slow down the balance of payment (BoP) deficit to $4 billion this year, a sharp drop from last year’s gap of $8.8 billion, state online newspaper VnEconomy reported October 22, citing the government report on October 17.

The government predicted the country’s current account deficit is likely to stand at $5.4 billion this year. The current account deficit is total sum of $8.2 billion trade deficit, service deficit of $0.55 billion and income receipt gaps of $4.2 billion, the overseas in-bound remittance of $7.5 billion and other smaller components.

The country’s export and import turnover is estimated to reach $68 billion and $81.5 billion respectively.

Meanwhile, Vietnam runs a capital account surplus of $11.5 billion, including $8.5 foreign direct investment and $3.5 billion official development assistance.

Statistics from the State Bank of Vietnam showed that Vietnam had a surplus of $3.435 billion in BoP in the first six months of this year, enabling the central bank to enrich the country’s forex reserves over the months.

In order to facilitate exports to curb the country’s widening trade gap, the SBV decided to devalue the dong against the U.S. dollar by 2.1% from Aug 18. This is the third de-valuation since late last year, indicating a cautious move by the central bank.

In a related issue, the Hanoi-based Chief Economist Martin Rama of the World Bank, in early June, projected a surplus of $2.6 billion in Vietnam’s BoP this year. An excess of $11.7 billion in the capital account will help Vietnam offset a deficit of $9.1 billion in the current account this year, the economist noted.

In the local forex market, dollar bid and ask prices at gold shops were quoted at VND20,050 and VND20,100, respectively, down VND70 from yesterday morning. Vietcombank’s dollar bid and ask were unchanged at VND19,490 and VND19,500, respectively. – Stoxplus.com

Tags: Vietnam trade, Vietnam trade deficit 2010