Vietnam trade deficit reaches US$7.36 billion on growing equipment imports

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Mar. 26 – Vietnam’s trade deficit in the first quarter of this year reached US$7.36 billion, nearly four times higher than during the same period last year, the General Statistics Office (GSO) reported yesterday.

The GSO attributed the deficit to the depreciation of the U.S. dollar against the Vietnamese dong, resulting in lower earnings for export contracts.

In addition, the State also tightened monetary policies in order to shrink the circulation of Vietnamese dong on the market said the Viet Nam News.

The GSO also stated that Vietnam’s commitments to the World Trade Organization and AFTA (ASEAN Free Trade Area) had required the country to continuously lower or remove taxes on many imports. Economic growth and strong inflows of foreign direct investment also contributed to the deficit. The growing economy and the arrival of money meant that imports of equipment, materials and consumer goods were up.

The GSO reported that import values surged sharply by 62.5 percent to US$20.4 billion, while export turnover increased by only 22 percent to US$13 billion in the first quarter of 2008.

The large surge in imports mainly stemmed from high demand for machines and equipments for production and construction. Import values on equipment and machines jumped to US$3.5 billion, up 57 percent against a year earlier. The import value of petrol also hit US$2.8 billion, rising 88.9 percent the Viet Nam News report stated.

If the import trend continues, the country’s trade deficit could hit US$20 billion for the whole 2008, double last year’s figure.