Vietnam braces for trade deficit in 2020

By Hung Le November 12, 2019 | 06:15 pm PT

Shipping containers are seen at a port in Ho Chi Minh City. Photo by Shutterstock/Igor Grochev.

The government expects a trade deficit next year as global conditions worsen, and wants to cap it at 3 percent of export turnover.

This will be the first deficit Vietnam faces after four consecutive years of surplus, which averaged at 14.5 percent of total export turnover between 2016 and 2018, Minister of Industry and Trade Tran Tuan Anh told the National Assembly Monday.

Growth in exports is expected to slow down to 6-7 percent next year, while imports will grow at a faster rate of 8-10 percent, resulting in a minor trade deficit, he added.

The coming into force of the EU – Vietnam Free Trade Agreement (EVFTA) and the worsening impact of the U.S. – China trade war could lead to a surge of imports into Vietnam next year, according to a government report submitted to the National Assembly.

In fact, external factors dampened Vietnam’s export growth in the first 10 months of this year, Anh said.

Many Vietnam’s key exports were facing challenges, including the EU’s yellow card imposed on Vietnam’s fisheries, fiercer competition in agricultural and seafood exports, tighter control over issues such as traceability and origin, and the slow development of supporting industries.

Vietnam’s rapidly growing exports to the U.S. in recent times could also lead to the country placing restrictions on imports from Vietnam, Anh added.

Exports between January and October this year reached $217.05 billion, up 7.4 percent year-on-year, but significantly lower than the 15.2 percent growth achieved in the same period last year, according to the General Department of Statistics.