April 24, 2019 20:53

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Will Vietnam return to trade deficit in 2019?

09:47 | 27/01/2019

VCN - Vietnam's exports in 2018 have achieved impressive results, creating momentum for positive growth of 8-10% in 2019. However, export in 2019 will face many challenges. After 3 consecutive years of surplus, trade deficit is expected to return.

will vietnam return to trade deficit in 2019 Trade deficit not a cause for concern
will vietnam return to trade deficit in 2019 Vietnam achieved trade deficit from Korea by $US 24 billion
will vietnam return to trade deficit in 2019 Near Tet, Vietnamese trade deficit
will vietnam return to trade deficit in 2019
Vietnam's 2018 import and export activities continue to achieve impressive results, contributing positively to the overall growth of the national economy. In the photo: Activities at Tan Vu port, Hai Phong. Photo: HUY KHÂM

Trade surplus into the strict markets

According to the information published at the Conference summing up the work in 2018 and deploying the tasks of 2019 of Industry and Trade on January 17, Vietnam's import and export activities in 2018 continue to achieve impressive results actively contributing to the overall growth of the national economy, thereby contributing significantly to GDP growth, macroeconomic stability, exchange rate stability, inflation control and payment balance improvement. Specifically, the scale of export products continued to expand. The number of goods with export turnover from 1 billion USD and up, are 29 items (including 8 export items of over 5 billion USD and 5 export items of over 10 billion USD), accounting for 91.67% of total export turnover.

Deputy Minister of Industry and Trade Hoang Quoc Vuong said: The export and import markets are expanding, not only strengthening in traditional markets but also exploiting new and potential markets. Export turnover to all market areas achieved positive growth, especially in markets with free trade agreements (FTA) with Vietnam such as ASEAN, China, Korea, India, Australia, and New Zealand. In particular, Vietnam has exported mainly to developed countries' markets with strict requirements for imported goods, such as the United States (trade surplus of 32.24 billion USD in 2017 and 34,7 billion USD surplus in 2018), and the EU (2017 export surplus of 26.14 billion USD has increased to 28.7 billion USD in 2018).

Talking about exporting goods in 2018 would be a shortcoming if not mentioning the export of domestic enterprises continued to grow well. "If in the previous years, the export of FDI enterprises always achieved higher growth rates than domestic enterprises, but recently, the growth rate of the domestic sector has been higher than the FDI. In 2018, domestic enterprises exported about 69.2 billion USD, up by 15.9%, higher than the general export growth and higher than the growth of FDI enterprises (including crude oil) of 12.9%,” Deputy Minister Hoang Quoc Vuong said.

Despite achieving brilliant export results, but looking closely at Vietnam's "picture" of exporting goods, it is not difficult to realize that there are still many shortcomings. These are agricultural and aquatic products that face many difficulties in accessing markets with high demands on quality and food safety. Most export products have not built their own and firm brand. Besides, the large import rate of raw materials, fuels, especially raw materials for processing, shows that the processing in the industry is still large, depending heavily on the external supply market. This makes the economy at a disadvantage whenever world prices increase, increasing domestic production costs, reducing the competitiveness of exported goods.

Trade deficit will return in 2019

In 2019, the Ministry of Industry and Trade proposed that export will reach about 265 billion USD, an increase of about 8-10% compared to 2018; Importing about 268 billion USD, an increase of about 11.7%. Thus, instead of consecutive trade surplus as in the past few years, it is estimated that in 2019 Vietnam will have a trade deficit of about 3 billion USD... The rate of trade deficit compared to export turnover continues to remain below 2%.

Further analysis of import and export situation in 2019, Deputy Minister Hoang Quoc Vuong said: export in 2019 continues to face some difficulties and challenges as global supply continues to increase, more and more countries join the supply of agricultural products, while many countries promote programs and plans to promote production, towards gradually reducing dependence on import sources, leading to stronger competition in export of agricultural and aquatic products. In addition, the trend of trade protection is increasing, especially after the United States applied measures to increase import duties on imported goods from countries. In addition, countries are increasingly applying strict food safety and environmental protection standards, such as the European Commission (EC) tightening the level of pesticide residues for imported agricultural products, applying legal fishing regulations (IUU) and legal timber use (FLEGT); many countries have issued regulations on traceability...

Some experts commented: Forecasting in 2019, the export price of agricultural products is unlikely to increase like 2017 and tends to be stable as in 2018, so this is no longer a favorable factor affecting export growth. Besides, the new production capacity from investment in agricultural product processing technology has not created much expectation on price growth and value added goods.

In response to the question of trade surplus, and the reference about trade deficit in 2019, the Ministry of Industry and Trade stated: Import demand is expected to increase because export is forecast to continue to grow, especially in the sectors where our country depends on raw materials, machinery, equipment and spare parts from foreign countries. Therefore, it is forecasted that importing this group of products (the group that needs to be imported) will continue to grow highly. "Forecast for 2019 and subsequent years, with the implementation of FTAs, such as the Comprehensive and Trans-Pacific Partnership Agreement (CPTPP) or Vietnam - EU, will create a new wave of investment in Vietnam of the domestic and foreign enterprises to take advantage of opportunities from these 2 big markets. The import of technology, machinery and equipment for projects and purchasing materials for production will increase. This leads to a trade balance that could reverse from being trade surplus to trade deficit,” Deputy Minister Hoang Quoc Vuong analyzed.

From a local perspective, Mr. Nguyen Duc Chung - Chairman of the City People's Committee of Hanoi points out: In 2018, Hanoi's export of goods has increased by 21% compared to 2017. Hanoi highly appreciates the coordination of the Ministry of Industry and Trade in import and export, marketing Hanoi's strong products with a number of markets such as the EU, Japan and South Korea, thereby increasing export share. "In the market access, promoting the export of goods, currently the Ministry of Industry and Trade has employees in the embassies of the countries, so in the near future, propose to the Ministry of Industry and Trade to strengthen trade promotion in the direction of linking with the chain and retail distribution companies in other countries, at the same time coordinating with the Ministry of Agriculture and Rural Development to build a traditional market system, meeting the standards of countries so that when goods reach the market, it is possible to export to the countries," Mr. Chung said.

will vietnam return to trade deficit in 2019 Nearly US$ 35 billion of trade surplus to the US market in 2018

VCN- According to the latest information from the General Department of Vietnam Customs, at the end of ...

Agriculture and fisheries are one of the key export commodity groups of Vietnam, forecasting to face many difficulties in deep integration. From this perspective, the Minister of Agriculture and Rural Development Nguyen Xuan Cuong proposed the Ministry of Industry and Trade to closely coordinate with the Ministry of Agriculture and Rural Development in both opening and developing markets and in terms of content training and market protection skills. “2019 is the first year that the CPTPP Agreement comes into effect, agriculture will be a very vulnerable sector..., it is recommended that the Ministry of Industry and Trade have a program to coordinate with the agricultural sector more closely. I hope the Ministry of Industry and Trade and the vertical system work closely with the agricultural sector to implement the guidelines of the National Assembly and the Government well, this year strive to achieve higher results than the previous year, turning challenges into opportunities," Minister Nguyen Xuan Cuong emphasized.

By Thanh Nguyen/ Huu Tuc