Vietnam is forecast to suffer a huge trade deficit of US$8 billion in 2007, only one year after joining the global trade club, WTO, up 66.32 per cent on-year, state economists said recently.
The figure is contrary to the previous projection of many trade experts that Vietnam’s WTO membership will facilitate the country’s trade activities, especially in boosting export value.
The alarming trade gap estimation for the whole year is fueled by the country’s record trade deficit of $4.78 billion in the first half of this year, up 155.61 per cent on-year, as imports continue growing faster than exports.
Vietnam earned $22.45 billion from goods exports during the first six months, up 19.4 per cent on-year, while import spending hits $27.23 billion, up 30.4 per cent. The higher imports resulted from increasing import of machines, equipment and materials serving for production and key national construction projects such as Dung Quat oil refinery, Ca Mau gas-power-fertilizer complex, said economists.
The deficit, which has already surpassed this year’s forecast of $4.7 billion, is considered an unusual phenomenon, meaning poor competitiveness of services and goods, they added.
The higher prices of goods in the international market, high demand for goods of the national economy and the implementation of WTO commitments on import tax reduction were mainly attributed to the first half’s big trade gap, the Ministry of Trade (MoT) said.
Of the $6.34-billion increase in import turnover in January-June, the increase of $1.31 billion was caused by the higher import prices, while the growth of $5.03 billion was brought about by the high demand of the national economy, specified the ministry.
According to MoT, the trade deficit was rather high in the first half, but it was acceptable for such a developing economy like Vietnam. The higher imports were mainly because of the increased imports of machinery and materials for production, therefore, in the long term, the increased imports would be necessary for the economic development.
The ministry, however, warned that the overly high excess of imports over exports should be improved. The high imports mean the limited competitiveness of Vietnam-made products, which makes the products unable to compete with imported goods on the home market.
To narrow the trade gap, the country should speed up production to accelerate export turnover, pour more investment in auxiliary and processing industries to reduce raw material exports and increase processed products, said the ministry.
In 2007, Vietnam is forecast to bag $47.5 billion in exports, up 20 per cent on-year and spend $52.2 billion on goods imports, up 17.5 per cent.
The fast-growing economy is expected to earn up to $100 billion from goods exports by 2010 if the country takes full advantage of the opportunities afforded by and overcome challenges emerged by the recent WTO membership. (Labour, Countryside Today)
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