Vietnam’s Trade Deficit Forecast to Hit US$13.5 Billion this Year

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Oct. 20 – Despite a 19.1 percent rise in exports this year, Vietnam’s government on Wednesday projected that the country’s trade deficit will grow to US$13.5 billion this year, putting pressure on the authorities to once again devalue the dong.

Vietnam’s dong has already seen three devaluations over the last year, with the last one coming on August 17, but the country’s large trade and budget deficits, in addition to low foreign exchange reserves, make it vulnerable to another devaluation.

Prime Minister Nguyen Tan Dung, reading a government report to the National Assembly, said that Vietnam’s foreign debt was set to rise to 42.2 percent of GDP, up from 30 percent last year. He also said that government debt would rise to 44.5 percent of GDP and public debt would hit 56.7 percent of GDP.

The dong, which is pegged to the U.S. dollar, traded at VND19,433 per US$1 on Wednesday.