Vietnam's trade deficit soars

Vietnam's trade deficit soars

HANOI (AFP): Vietnam's trade deficit has soared to US$ 4
billion in 1996, up more than 80 percent on the previous year as
the country's rapid export growth failed to keep pace with
imports.

Exports for the year were at $7.1 billion, up 30 percent on
1995 but imports rose 36.2 percent to $11.1 billion, according to
figures released early this week by the General Department of
Statistics.

The trade deficit for 1995 was up 73 percent, a rise that
Vietnamese officials attribute to increasing imports of equipment
and machinery by foreign investors.

The trade figures have raised some alarm bells with Prime
Minister Vo Van Kiet complaining that Vietnamese industries
remain generally uncompetitive.

Vietnam's swelling trade and current account deficits -- now
at more than 15 percent of gross domestic product -- come after a
year of mixed economic results.

Inflation was at just 4.5 percent -- its lowest figure since
reforms were launched in earnest a decade ago -- and growth has
been 9.5 percent, according to government figures.

But some western economists warn that Vietnam is entering a
cyclical slowdown with stockpiles rising and increasing
centralized government control over the state sector hindering
the development of exports.

Several economists have estimated that growth could slow to
around 7 percent next year because of a failure to clear away
bottlenecks in export procedures.

This year cement and steel stockpiles have grown, leading to
stronger appeals for more protection for domestic industries.

Although official figures put the share of imports from
consumer goods at less than 10 percent of the total, these
figures are believed to underestimate the amount of money spent
on generally unproductive foreign goods.

The figures also fail to account for smuggling of consumer
goods across the borders from Laos, Cambodia and China that could
add as much as a billion dollars to Vietnam's deficit.

Coal exports were up 44 percent over 1995, while rice sales
overseas grew 51 percent despite widespread damage to crops from
flooding and storms. Sales of rubber, coffee and textiles all
declined.

Steel imports grew 43.6 percent despite a major rise in
domestic production while refined fuels were up 15.9 percent.

Ho Chi Minh City saw the fastest rise in exports of any
region, up 42.9 percent over the past year to 3.72 billion
dollars, the city's statistics office reported.

Manufactured exports from the city grew at 24.5 percent and
accounted for nearly two thirds of the total exports followed by
agricultural products which grew at 146.3 percent in 1995 amid a
surge of rice sales.

Overall economic growth in Ho Chi Minh City in 1996 has been
estimated at around 15 percent, making it one of the fastest
growing cities in the world.