Vietnam trade deficit eases in first quarter
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Vietnam's trade deficit eased slightly in the first three months of 2011, official estimates showed Friday, in a boost for the government as it battles to stabilise its troubled economy. The deficit is forecast at $3.03 billion in the January-March period, against $3.43 billion for the same quarter last year, the General Statistics Office (GSO) said. Compared with the first quarter of 2010 exports rose 33.7 percent to $19.25 billion, while imports gained 23.8 percent to $22.3 billion, the GSO said.
Last year's trade deficit was estimated at $12.4 billion and the government has set a target that this year's figure should not exceed 18 percent of export revenues.
"Things are on track and I think that we will be able to meet this target," Deputy Minister of Industry and Trade Nguyen Thanh Bien told Dow Jones Newswires. The data come after Hanoi in February devalued its dong currency 9.3 percent in a bid to narrow the trade gap, while it has also increased interest rates to tame inflation, which is estimated to a two year high 13.9 percent this month.
Hanoi has described bringing prices under control as its number one priority.
However, the fall in the trade deficit is "very small" and the impact of the devaluation the largest in years is not expected to be felt until later months, said Deepak Mishra, lead economist at the World Bank in Hanoi.
The devaluation was the first strong action by the government after months of growing investor concern over rising inflation, a struggling currency, and a trade deficit that accompanied the country's high growth rate.
International capital markets have welcomed Vietnam's moves as "a good start" while the cost of borrowing has dropped in recent weeks, bringing it back in line with the emerging market average, Mishra said. But economists say much will depend on how the government implements its stabilisation package, and whether those efforts are sustained.
Annual growth reached 6.8 percent in 2010 and the Politburo is now downplaying the need to top that figure this year. Analysts say the government is looking to balance its traditional quest for growth with stabilisation.
