Vietnam’s Imports Slow Down to 43 Percent

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Oct. 24 – Vietnam’s import growth for October slowed down to 43 percent from the previous month's 48 percent as companies struggled to raise money, reports the General Statistics Office.

The trade gap from January to October now stands at US$16.3 billion. The State Bank of Vietnam has already cut its benchmark interest rate to boost the lending market.

“The trade deficit in Vietnam is all based on credit, and the government slammed on the brakes on credit very hard around the end of the first quarter,” Fiachra MacCana, head of research at Ho Chi Minh City Securities Corp. told Thanh Nien News, “Companies are now facing a very severe credit crunch.”

The deficit rose by 66 percent compared to last year's figures while exports rose by 37 percent through October to US$53.8 billion, down from a 39 percent.

The trade gap’s previous “rapid” increase had threatened economic stability, SBV Governor Nguyen Van Giau said last week.

Vietnam's imports of machinery and equipment increased by 33 percent to US$11.6 billion, and import of petroleum products increased by 71 percent to US$10.3 billion. Steel imports also posted an increase of 57 percent to US$6.1 billion.

“Vietnam still has to import a huge amount of capital equipment to build roads and factories to make the transition to the normal model of the Asian exporting economy,” MacCana of Ho Chi Minh City Securities told Thanh Nien News. “I never bought the argument that Vietnamese imports were for consumer purposes.”