Trade surplus as imports plunge

Vietnam has managed to avoid the sharp falls in exports experienced by other Asian nations, taking advantage of its focus on lower-end products such as garments. Vietnam posted a trade surplus for the first four months of the year, swinging from a deficit in the same period a year earlier, as import demand tumbled while garment exports increased.

The country recorded a surplus of US$801 million through April, compared with a shortfall of more than $11 billion in the same period a year earlier, the General Statistics Office said in Hanoi Friday. Exports declined 0.1 percent to $18.64 billion, while imports plunged 41 percent to $17.84 billion. Sluggish first-quarter economic growth, the slowest on record, cut into demand for raw materials from overseas. Vietnam has also managed to avoid the sharp falls in exports experienced by other Asian nations, taking advantage of its focus on lower-end products such as garments and on commodities such as rice. “People still need to have staples at the table, and they still need to have clothes for their kids,” Myron Brilliant, a vice president at the US Chamber of Commerce in Washington, told reporters Thursday in Ho Chi Minh City. “Vietnam is in areas where consumers are still buying products.” Garment shipments rose 2 percent to $2.59 billion, according to Friday’s report. Vietnam is among the world’s top 10 garment exporters, Deputy Prime Minister Nguyen Thien Nhan told an investment conference in HCMC Friday. FIRST MONTHLY DEFICIT IN 2009 With a sharp drop in exports of precious metals and gems in April, Vietnam would record the first trade deficit this year, the General Statistics Office estimated. Overall exports would come to around US$4.5 billion in April and imports would be $5.2 billion, the office said. The precious metal and gem stones category, consisting mainly of gold re-exports, earned only a paltry $15 million in April, the statistics department said. In March it earned $1.1 billion and in February $1.3 billion. Over the past two weeks, gold prices in Vietnam have been as much as $20 a tael more expensive than on the international market, gold traders said. A tael equals 37.5 grams. The domestic price of gold had been lower since the start of the year, prompting the record surge in gold re-exports. The central bank banned gold imports in May last year and had restricted exports, although it relaxed the rule to let a selected number of banks export the metal in February and March to take profits, bankers and gold traders said. Source: Reuters Self-sufficient “For a lot of the big retailers in the US, Vietnam is their second-largest platform, after China,” said Virginia Foote, president of financial advisory company Vietnam Partners LLC, in an interview Friday in HCMC. “Vietnam is hanging on to second, and that’s not a bad place to be.” Rice exports jumped 44 percent by value to $1.16 billion. Vietnam’s target is to maintain a “strong, self-sufficient export-oriented agriculture industry,” Nhan said Thursday. “Vietnam remains the world’s second-largest rice exporter,” the US Foreign Agricultural Service said in a report this month. “Large-volume contracts are often signed within the first two quarters of the year.” Oil exports slumped 45 percent by value to $1.98 billion, even while increasing 20 percent by volume. The average global price of crude oil tumbled 56 percent during the period. Footwear shipments slipped 11 percent to $1.24 billion, while seafood exports fell 7 percent to $1.06 billion. ‘Less vulnerable’ “Vietnam has been successful in having a fairly diverse export portfolio,” said Foote. “They’re less vulnerable. In this environment, that’s been very helpful.” Exports of precious stones and metals surged to a record $2.54 billion in the first four months from negligible levels a year ago. The sale of gold abroad has been driven by Vietnamese taking advantage of higher international prices for bullion, HSBC Holdings Plc said in a note. Almost all Vietnamese gold exports result from bullion obtained through past imports rather than from local output. “The gold export figures have been coming down quickly,” said Jonathan Pincus, an economist with the Vietnam Program at the Harvard Kennedy School in HCMC, in an interview Friday. “One would think that that’s it, that’s been played out.” Imports of machinery and mechanical products slumped 27 percent to $3.37 billion, while steel purchases from abroad tumbled 68 percent to $1.16 billion, according to Friday’s report. Foreign exchange “One of the reasons that imports are falling so rapidly is that people can’t get access to foreign exchange, as banks and exporters are holding it because of concerns about the exchange rate and fears that if they sell foreign exchange now they won’t be able to get it back later,” said Pincus. “And a lot of it is just a slowdown in investment,” he said. “It’s a signal that a lot of investment projects are being postponed or scaled down.” Vietnam is likely to post a trade deficit for the full year of as much as $6 billion, wrote Prakriti Sofat, a Singapore-based economist at HSBC, in a research note Friday. Imports will “show more life as base effects become less favorable and the policy stimulus feeds through the economy,” Sofat wrote. “It is important to bear in mind that Vietnam remains in the early stages of development, meaning that the country needs to import large quantities of capital goods, keeping it in a structural deficit.” Source: Bloomberg