Vietnam inflation accelerates in May, trade deficit widens to record high

Vietnam’s inflation rate climbed to 5.6% in May, up from 5.46% in April, as rising fuel prices strained the economy. The National Statistics Office (NSO) attributed the increase to higher costs for imported fuels, compounding pressures from global disruptions like the Iran war. The country’s trade deficit reached a record $5.21 billion in May, widening from $3.28 billion in April, with exports rising 18% year-over-year to $46.93 billion and imports surging 33.8% to $52.14 billion. Export growth slowed from 21% in April, while import growth accelerated slightly from 32.5% the prior month. For the first five months of 2024, exports increased 19.5% to $215.66 billion, but imports grew faster at 30.8% to $229.46 billion, resulting in a cumulative deficit of $13.8 billion. Crude oil imports fell 19.1% in volume but rose 4.1% in value, while refined petroleum imports jumped 15% in volume and 81.6% in value. Liquefied gas imports also surged, up 27.5% in volume and 40.6% in value. Industrial production expanded 8.8% year-over-year in May, down from 9.9% in April, while retail sales rose 11.8%. Foreign investment inflows for January-May totaled $9.75 billion, a 9.6% increase from the same period last year, slightly below the 9.8% growth seen in the first four months. The data highlights Vietnam’s economic vulnerabilities, with rising costs and trade imbalances outpacing export gains amid global instability.