Vietnam's trade gap forecast at $7.5b in H1: ministry
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Vietnam's trade deficit in Jan-June may top $7.5 billion, the Ministry of Planning and Investment has warned in a report to the government.
Exports were likely to reach $41.5 billion, up 27.8 percent year on year compared to a target of 10 percent, it said.
Imports were estimated at $49 billion, a 26.4 percent increase.
After five months, the trade deficit is $6.59 billion, with the figure for May alone being $1.7 billion, the highest level in 17 months.
Rising trade gap has reflected inadequacies in a group of measures released from the start of this year to curb trade deficit, accompanied with tightening monetary policies as well as tariff barrier.
Till now, the government, Ministry of Finance and Ministry of Industry and Trade have applied a series of policies such as stopping purchase of imported cars for public services; limiting imports of luxury goods such as car, mobile phone, wine, beer, tobacco, cosmetics; issuing the portfolio of commodities needed to be controlled and limited in imports.
However, the policies have been not as effective as expected.
As explained by a representative of Ministry of Industry and Trade, such a high trade gap in Jan-May was attributed to increases in prices as well as import volume which pushed import spending up $9.4 billion.
In which, the rising costs of raw and processed materials, and fuel have added $1.5 billion to Jan-May trade deficit.
Moreover, the measures of curbing trade deficit mainly focused on groups of goods subject to limited and controlled portfolio. But they only account for 16.9 percent of total import expenditure while other groups including equipments, machines, materials for production and processing make up 83.1 percent.
Apparently, the policymakers missed some objectives needed to be controlled in order to reduce trade gap.
Worryingly, the deficit is expected to widen rapidly in the second half of the year, according to Ministry of Industry and Trade.
Warning of “dual-risk”
Economists said Vietnam's trade gap was facing "dual-risk" including more value in import spending and less volume. For example, in the first 5 months, imports of petrol were over 5.14 million tons costing more than $4.5 billion.
Meanwhile, import volume in Jan-May only grew 15.6 percent year-on-year but the spending jumped 41 percent.
Also, the country is suffering "dual-risk" in crude export and import of refined products.
For example, for many years, export of crude oil could offset imports of fuel. But in the first 5 months of 2011, crude oil export brought in only $3 billion (with the crude oil price increased 25 percent) while the import of fuel cost $4.6 billion (price of fuel products rose 32-40 percent).
Similarly, export price of rubber and fiber surged 25.5 percent and 39.4 percent respectively, while cotton and ordinary metals all soared 110 percent, which explained that imports of Jan-May increased only $1.9 billion by volume but surged $7.5 billion by prices.
