News Room - Business/Economics

Posted on 25 Jul 2008

Vietnam's import growth slows as curbs on economy take effect

Vietnam's imports increased at the slowest pace this year, indicating that government efforts to prevent the economy from overheating are working. 

Imports grew 56.8 percent for the year through July from a year earlier, and exports increased 37.7 percent, according to preliminary figures from the General Statistics Office in Hanoi.

The trade deficit widened to $15 billion, an increase of less than a $1 billion for a second straight month. The shortfall rose by more than that every month since July last year.

Slowing the pace of import growth is a priority for the government, which is concerned a rapidly expanding trade deficit may trigger a currency crisis.

The State Bank of Vietnam has increased its benchmark interest rate three times this year and required banks to set aside more money to cool lending. Other directives have ordered state agencies to cut spending.

"There are encouraging signs that the authorities' tightening polices are starting to work," the Asian Development Bank said in a report July 22. ``Import growth has slowed while the dong is stabilizing.''

A declining trend in the deficit may ease investor concerns about an overheating economy in Vietnam, Standard & Poor's said last month.

Imports rose to $51.9 billion, slowing from a 60.3 percent year-on-year pace of expansion in the January to June period, according to the General Statistics Office figures.

Exports climbed to $36.9 billion, the fastest growth since January 2005, indicating the dong's drop of almost 5 percent this year may be making the nation's goods more competitive.