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December 12, 2008

Vietnam revises down 2009 import forecast
Vietnam has cut its forecast for 2009 imports by around 13 percent to $84 billion from a previous forecast of $96.6 billion due to falling commodity prices, Reuters reported, quoting a government trade report.

The country's trade deficit in 2009 would be between $17 billion and $18 billion, instead of $19.9 billion forecast last month, the Industry and Trade Ministry report said.

The trade deficit this year is forecast by the government to be $19 billion. A smaller trade deficit would reduce the squeeze on its balance of payments, a factor analysts have said is putting pressure on authorities to devalue the dong in 2009.

Vietnam's currency could be devalued next year due to a worsening balance of payments and bad bank debts while the government also needs to prop up exports hit by the global economic downturn, economists said on Tuesday.

“Given the current situation and the early months of 2009, prices of many input raw materials, such as steel, steel billets, fertiliser and oil products, are seen falling 30-50 percent from 2008,” the trade ministry's report said.

"Imports in 2009 would not have sudden increases as in 2008", also due to government actions in curbing imports such as tightening spending for inefficient projects, raising import tariffs, it said.

On Thursday, Vietnam's Finance Ministry raised import tariffs on several oil products to the limit of 40 percent following a decline in world crude oil prices.

Vietnam's import volumes could still rise next year but lower commodity prices would stunt any growth in the value of imports, the Industry and Trade Ministry said.

It has projected spending on machinery, spare parts and key raw material would account for 76 percent of total imports next year.

Paper, vegetable oil, gemstones and precious metals would be responsible for a combined 16.7 percent of 2009 imports while goods subject to import curbs such as cars, material for tobacco production, motorcycle parts would make up the remaining 7.3 percent.

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