Vietnam recorded a trade deficit of USD 23.51 billion from the beginning of the year to September 15, the highest level on record, according to preliminary data released by the Customs Department.
Speaking to Dantri Newspaper, economist Le Xuan Nghia identified several key factors behind the sharp rise in imports. He said US tariff policies had reduced the effectiveness of exporters in the American market, limiting export growth compared with expectations.
At the same time, foreign direct investment (FDI) companies have continued to expand operations in Vietnam, increasing demand for imported machinery, equipment, production lines and construction materials needed for new factories and expansion projects.
However, Nghia noted that the trade deficit trend within the FDI sector has been easing. Since the second quarter, the import surplus of foreign-invested enterprises has declined relatively quickly and could continue to fall in the fourth quarter and early next year, provided US tariff policies remain at what he described as an “acceptable” level.
The economist argued that rising imports should be viewed positively if they are concentrated in machinery, equipment and production inputs.
“When businesses invest in factory construction, importing machinery and production lines is a preparation for future manufacturing capacity and is usually tied to plans for future output,” he said.
Nghia cautioned, however, that the trade balance should be assessed alongside the current account balance. The current account includes not only trade in goods but also services and income flows, including profits repatriated overseas by FDI companies.
A large trade deficit that leads to a current account deficit could affect the country’s balance of payments, particularly at a time when the US dollar remains volatile, he said.
A report by SSI Research, the research arm of SSI Securities Corporation, said the current trade deficit largely reflects an investment cycle aimed at expanding the economy’s production capacity.
According to the report, most of the deficit is concentrated in the domestic business sector, while the FDI sector continues to record a trade surplus. This suggests local companies are increasing imports of machinery, equipment, raw materials and industrial supplies to support investment and manufacturing projects.
SSI Research said the key question is whether imported machinery and materials can be effectively transformed into export products during the second half of the year.
If new production capacity comes online quickly, particularly as the global technology cycle continues to recover, exports could accelerate in the third and fourth quarters, helping narrow the trade deficit and ease pressure on the exchange rate.
Conversely, if imports continue to rise without generating a corresponding increase in export output, the trade deficit could become a longer-term drag on the economy and add pressure to the balance of payments and foreign exchange reserves.
