Trade deficit returns after 23 months

Import and export of goods at Tan Vu port - Hai Phong

According to the General Statistics Office, the export turnover of goods in May is estimated at 32.81 billion USD, up 15.8% over the same period in 2023. However, imports accelerated faster, up 29.9% over the same period, estimated at 33.81 billion USD.

As a result, Vietnam had its first month of trade deficit in nearly two years. The last time the trade balance of goods recorded a trade deficit was in May 2022, at 2.02 billion USD.

The return of trade deficit is viewed positively by research organizations, because it is believed that manufacturing enterprises increase purchases of raw materials and supplies.

According to the General Statistics Office, the return of the trade deficit is a matter of concern, but can be expected. "The trade deficit due to the sharp increase in imports of equipment, machinery, and raw materials for production is an indicator that industrial production will recover more positively in the coming time," the agency said.

Specifically, some items serving processing and production have high import value increases such as phones and components (55.1%); iron and steel (50.1%); electronics, computers and components (39.3%); petroleum (34.6%); textile, garment, footwear and sandal materials (33.7%); plastics (31.4%).

Imports of these raw materials and fuels increased in the context of the continued improvement of the industrial production index (IIP), estimated to increase by 8.9% in May compared to the same period last year. In particular, many export-serving industries increased sharply, such as: rubber and plastic (24.1%); wood processing and wood production (23.0%); electrical equipment (19.4%); electronics, computers and optical products (17.4%); and clothing (9.4%).

At the same time, domestic consumption is also more positive. Total retail sales of goods and consumer service revenue last month is estimated to increase by 9.5% over the same period in 2023.

The Vietnam Purchasing Managers’ Index (PMI) survey released by S&P Global on June 3 also recorded that Vietnam’s manufacturing continued to grow in May. In particular, input purchasing activities increased for the second consecutive month.

"New orders rose sharply again amid signs that demand growth was being sustained, driving stronger output growth in May," said Andrew Harker, chief economist at S&P Global Market Intelligence.

ACB Securities (ACBS) recently updated macroeconomic report assessed that "trade deficit should be more joyful than worrying". "At first glance, this seems to be bad news because it increases pressure on exchange rates. However, when analyzing each figure carefully, this could be a positive signal for the economy", the report stated.

ACBS pointed out that the strong increase in imports, especially of electronics, electrical appliances and textiles, could be a step ahead of exports in these key sectors. Last year, slow import growth also hampered the export recovery.

This securities company forecasts that imports of electronic computer components, machinery and equipment will increase by 20-50% in May alone, which will help exports of these items increase by 20-30% in the second half of 2024.

For example, the sharp increase in textile raw material imports (33% in May and more than 20% in 5 months) signals that orders will increase well in the remaining period of this year. The increase in iron and steel arriving at ports can be seen as a move to stock up on cheap goods to serve the growing consumption demand and to cope with tax policy risks.

Although the trade deficit was recorded in May, Vietnam still maintained a trade surplus in the first five months of the year, at 8.01 billion USD. Of which, import turnover was estimated at 156.77 billion USD, up 15.2% over the same period. Imports were at 148.76 billion USD, up 18.2%.

TH (according to VnExpress)

Source: https://baohaiduong.vn/nhap-sieu-quay-lai-sau-23-thang-383597.html