[Vnbiz] Vietnam Trade Gap Triples, as JPMorgan Notes `Worrying' Trend

[Tai Phan]

Vietnam Trade Gap Triples, as JPMorgan Notes `Worrying' Trend

By Jason Folkmanis

May 26 (Bloomberg) -- Vietnam's trade deficit more than tripled in the first
five months of the year, the government estimated, as JPMorgan Chase &
Co.<http://www.bloomberg.com/apps/quote?ticker=JPM%3AUS>released a
report citing ``worrying trends'' with the country's balance of
payments.

Vietnam's trade gap widened to $14.42 billion from $4.25 billion at the same
time a year earlier, according to preliminary figures released by the
General Statistics Office in Hanoi. Exports rose 27 percent to $23.4
billion, while imports climbed 67 percent to $37.82 billion, according to
the figures.

The widening of the trade gap this year has contributed to pushing the
country's current account from ``near balance in 2006 to a large deficit in
2007,'' JPMorgan Chase said in a report dated May 23 and received today by
Bloomberg. The surge in imports has been worsened by consumption-related
purchases from abroad, an Asian unit of the U.S. bank said.

``Foreign investment flows have grown considerably and account for a large
portion of the financial account surplus, but these alone cannot fund the
trade deficit,'' wrote Matthew
Hildebrandt<http://search.bloomberg.com/search?q=Matthew%0AHildebrandt&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>,
an economist at JPMorgan Chase Bank in Singapore. ``Financing is partly from
short-term loans, and portfolio and remittance flows, which can be fickle.''


Vietnam's purchases of machinery and equipment from abroad jumped 43 percent
through May to $5.72 billion, while the import of petroleum products from
abroad climbed 69 percent to $4.86 billion. Vietnam plans to open its first
oil refinery at Dung Quat Bay in central Vietnam by early next year.

Steel and Cloth

Iron and steel imports surged 84 percent by volume and 138 percent by value
to $4.15 billion, while purchases of cloth from abroad advanced 15 percent
to $1.79 billion.

On the export side, crude oil shipments benefited from higher prices to
climb 46 percent by value through May to $4.521 billion, even while slipping
11 percent by volume. Garment exports rose 19 percent to $3.26 billion,
while footwear shipments rose 13 percent to $1.75 billion.

Rice exports added 13 percent by volume to 2.12 million tons, while also
taking advantage of higher prices to climb 94 percent by value to $1.17
billion. Coffee exports fell 36 percent by volume to 493,000 tons and 10
percent by value to $1.01 billion.

Vietnamese coffee production has been hampered in the current crop year by
``unfavorable weather and lower yields,'' the agricultural attache's office
at the U.S. Embassy in Hanoi said, in a
report<http://www.fas.usda.gov/gainfiles/200805/146294599.pdf>this
month.

Vietnam's foreign-bound shipments have also been hampered this year by
accelerating inflation, which has ``become a significant hindrance to export
competitiveness,'' JPMorgan Chase said in its note.

To contact the reporter on this story: Jason
Folkmanis<http://search.bloomberg.com/search?q=Jason+Folkmanis&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>in
Ho Chi Minh City at
folkmanis at bloomberg.net
*Last Updated: May 26, 2008 06:33 EDT*
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