ANZ RESEARCH: VIETNAM – IS A ‘GOOD’ OR ‘BAD’ DEFICIT COMING?

ANZ Vietnam

Tuesday, 12 May 2015

We are now of the view that a persistent return to trade deficits – dragging the current account into full year deficit – now seems inevitable in Vietnam for 2015 and 2016. Over the past four months the Vietnamese trade balance has been in deficit with import growth – at 19.4% ytd y/y in April – running double the growth rate of exports. The last instance that import growth outstripped export growth over an extended period of time, the 12-month trade deficit reached almost USD18bn in 2010. Are this year’s recent trade numbers foreshadowing a return of massive trade deficits and a bad current account deficit? We don’t think so. At this stage, we would assess the coming deterioration in the Vietnamese trade balance as ‘good’.

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