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.