The national trade deficit this year has soared to nearly US$3.7 billion, after hitting $2.07 billion in the first four months. — Photo tapchitaichinh

HA NOI (Biz Hub) — The national trade deficit this year has soared to nearly US$3.7 billion, after hitting $2.07 billion in the first four months.

The General Department of Customs reported that by mid-May, Viet Nam's export revenues totalled $56.08 billion, while its import values reached $59.78 billion. Foreign direct investment (FDI) enterprises' exports were valued at $37.91 billion and imports at $36.04 billion.

The imported goods were mainly machinery, equipment, and spare parts, which reached nearly $10.5 billion in value.

"We are of the view that a persistent return to trade deficits – dragging the current account into full-year deficit – now seems inevitable in Viet Nam for 2015 and 2016," Eugenia Victorino and Glenn Maguire, economists with ANZ Bank in South Asia, ASEAN and Pacific, wrote in a report earlier this month.

With import growth – at 19.4 per cent year-on-year – running double the growth rate of exports over the first four months, Viet Nam's trade balance has been in deficit.

The economists forecast that the country will post a current account deficit of 0.5 per cent of the gross domestic product (GDP) in 2015 and 1 per cent of the GDP in 2016.

However, they assessed the coming deterioration in the domestic trade balance as "good" at this stage, with the growth of machinery and electronics imports driving much of the recent surge in total imports. Imports by FDI firms surpassing the imports of domestic companies also suggested that imports were inputs for export production.

"This type of deterioration in the trade balance is good as it will add to the productive capacity of the economy in the long run and will enable Viet Nam to continue pushing its production possibility frontier," they said.

They added that disbursed FDI year-to-date (ytd) was running at a very firm level at around $4.2 billion – the highest ever in ytd terms. Given that 70 per cent of promised FDI went to the manufacturing sector, they assumed the same distribution in disbursed FDI figures as well.

However, the economists noted, "There is likely to be an element of deterioration in the trade deficit due to the importation of consumption goods. This would be considered ‘bad' deterioration in the current account."

The General Department of Customs reported on May 15 that the country's main imports this year were cars, computers and telephones, besides machinery, iron and steel, petroleum, plastic, as well as materials for the garment, textile and footwear industries.

Rice, coffee, furniture, crude oil and garment, textile and footwear were the major exports, along with machinery, computers, and telephones.

The US continued to be Viet Nam's largest export market, importing goods worth $9.93 billion from Viet Nam in the first four months, a year-on-year increase of 15.7 per cent.

China led countries exporting to Viet Nam, selling $15.3 billion here during the period, a year-on-year rise of 23.4 per cent. — VNS