Vietnam recorded a trade deficit of just USD158 milion in the first six months of this year, lower than the USD685 million expected by the Government.

In June, the country saw a trade surplus of USD360 million compared to the figure of USD527 million in May. In April the country ran a trade surplus of USD3 million, raising the total trade surplus between January and April to USD78 million.

Vietnam is expected to see rapid trade growth in the next 15 years

In the first two quarters, the total value of Vietnamese trade was estimated at USD106.82 billion,  up 13.9% on-year. Exports accounted for USD53.33 billion, up 22.7% and import value making were USD53.49 billion , up 6.3% from the year before.

The Industry and Trade Ministry forecast Vietnam's trade deficit this year to reach USD5.5 billion.

Lower trade deficit partially attributed to fall in domestic consumption

The lower trade deficit is a positive sign for the national economy. However, a fall in imports in June that is three times higher than the rise of exports indicates a sharp decline in domestic consumption. Due to low demand enterprises are holding on to large stocks of inventory and have been forced to cut back on production.

According to the HSBC Purchasing Managers Index (PMI), the Vietnamese manufacturing sector has been witnessing a continued fall in demand over the past four months. This was highlighted by a drop in the seasonally-adjusted HSBC Vietnam Manufacturing PMI, from 48.3 in May to 46.6 in June. The index has now posted below the neutral 50.0 value for three consecutive months. The overall deterioration in business conditions reflected a marked decline in new orders during the month.

Currently, the Government is focusing on easing difficulties for businesses through slashing interest rates and dealing with high inventory, as well as boosting domestic consumption.

Changes in export structure

In June the export of phones and related components reached a total value of USD1.23 billion, up 60.1% from May. This raised the total export value of these products in the first half of this year to USD5.03 billion, up 146.2% against the same period of last year.

Computers and computer components also made gains, with a total export value of USD3.38 billion in the six months of the year, up 86.6% on-year.

The total export value of seafood products was estimated at USD2.86 billion; up 9.2% on-year, despite the fact that this sector saw a 4.7% fall in exports, or USD524 million, in June.

During the first two quarters, Vietnam exported 3.82 million tonnes of rice, bringing in USD1.75 billion, down 12.2% on-year.

According to the Global Connections Report, released by HSBC on July 10, Vietnam is expected to see rapid trade growth in the next 15 years. The report says that Vietnam’s total trade value from 2012 to 2026 will rise by 187%, close to doubling.