Vietnam - Nation turns around current account deficit

After eight years of suffering from a current account deficit, Vietnam will enjoy a surplus this year despite a turbulent economy.

The World Bank in Vietnam’s lead economist Deepak Mishra last week announced that in 2012 Vietnam would earmark a current account surplus, including a trade surplus for the first time since 2005.

“This is quite good news, though the figures are not so high. This is thanks to export growth largely by foreign enterprises. Also the current account surplus is attributed to a rise in remittances,” Mishra said

According to the World Bank’s calculation methodology, Vietnam’s current account surplus would be 2.7 per cent of gross domestic product (GDP), or $3.7 billion and the trade surplus would be 4.7 per cent of GDP, or $3.45 billion.

Meanwhile, the Ministry of Planning and Investment (MPI) estimated that Vietnam would face a trade deficit of $1 billion this year, equivalent to 0.9 per cent of total export turnover which is expected to be $83.79 billion, up 18.9 per cent on-year.

The government forecasted a trade deficit of $9.9 billion in 2013, equivalent to 8 per cent of total export turnover.

The World Bank also forecast that remittances into Vietnam this year would hit $9 billion. However, according to Deputy Minister of Foreign Affairs Nguyen Thanh Son, this figure might be $10-11 billion.

In 2011, remittances into the country totaled $9.2 billion.

“All these factors will help Vietnam swell its foreign currency reserves,” Mishra said.

Last week, MPI Deputy Minister Nguyen The Phuong told the Vietnam Business Forum (VBF) that in 2012 the nation’s foreign currency reserves would be equal to some 11 weeks of imports.

However, Mishra said it might be difficult for Vietnam to have such a current account surplus next year, because the world’s economic situation was expected to be greyer than this year. This would affect Vietnam’s trade and attraction of foreign direct investment (FDI).

Phuong also said the Vietnamese economy would grow 5.2 per cent this year, the same as the World Bank forecasted, with a size of $136 billion. Vietnam’s balance of payment would see a $8 billion surplus.

Thanh Dat | vir.com.vn

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