According to the General Statistics Office, merchandise exports in May were estimated at $32.81 billion, an increase of 15.8% compared to the same period in 2023. However, imports accelerated even faster, by 29.9% compared to the same period, estimated at $33.81 billion.
As a result, Vietnam recorded a trade deficit for the first time in nearly two years. The last time the trade balance for goods recorded a deficit was in May 2022, at $2.02 billion.
The return of a trade deficit is viewed positively by research organizations, as they believe it is due to increased purchases of raw materials and supplies by manufacturing businesses.
According to the General Statistics Office, the return of a trade deficit is a cause for concern, but it is something to look forward to. "The trade deficit, driven by a sharp increase in imports of equipment, machinery, and raw materials for production, is an indicator that industrial production will recover more positively in the coming period," the agency stated.
Specifically, some items used in processing and manufacturing saw a significant increase in import value, such as telephones and components (55.1%); iron and steel (50.1%); electronics, computers and components (39.3%); petroleum products (34.6%); raw materials and accessories for textiles, garments, footwear (33.7%); and plastics (31.4%).
Imports of these raw materials and fuels increased amidst a continued improvement in the Industrial Production Index (IIP), estimated at 8.9% in May compared to the same period last year. Many export-oriented industries saw significant growth, including: rubber and plastics (24.1%); wood processing and wood products (23.0%); electrical equipment (19.4%); electronics, computers and optical products (17.4%); and garments (9.4%).
In addition, domestic consumption is also more positive. Total retail sales of goods and consumer service revenue last month are estimated to have increased by 9.5% compared to the same period in 2023.
The Vietnam Purchasing Managers' Index (PMI) survey, released by S&P Global on June 3rd, also noted that Vietnam's manufacturing continued to grow in May. Specifically, input purchasing activity increased for the second consecutive month.
"New orders surged again amid signs that demand growth is being sustained, driving stronger output growth in May," said Andrew Harker, chief economist at S&P Global Market Intelligence.
A newly updated macroeconomic report fromACB Securities (ACBS) assesses that "the trade deficit is more cause for celebration than concern." "At first glance, this seems like bad news as it increases exchange rate pressure. However, upon closer analysis of each figure, this could be a positive signal for the economy," the report states.
ACBS points out that strong import growth, particularly in electronics, home appliances, and textiles, could be a precursor to exports in these key sectors. Last year, slow import growth also hampered the recovery of exports.
This securities firm forecasts that a 20-50% increase in imports of computer electronic components and machinery in May alone will help boost exports of these items by 20-30% in the second half of 2024.
Similarly, imports of textile raw materials increased sharply (33% in May and over 20% in the first five months), signaling strong order growth for the remainder of the year. The increased arrival of iron and steel at ports can be seen as a move to stockpile cheaper goods to meet rising consumer demand and to mitigate risks related to tax policies.
While Vietnam recorded a trade deficit in May, the overall trade balance for the first five months of the year remained at a surplus of $8.01 billion. Imports were estimated at $156.77 billion, a 15.2% increase compared to the same period last year, with exports reaching $148.76 billion, an 18.2% increase.
TH (according to VnExpress)Source
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