Why Vietnam posted a 3.6 billion USD trade deficit in the first quarter

Vietnam’s trade activity grew strongly in the first quarter, with both exports and imports rising. However, the trade balance shifted to a deficit after many years of surplus, driven by faster import growth than export growth.

Q1 trade figures: exports up, imports up faster

According to data from the General Department of Customs, total goods trade in Q1 reached about 249.5 billion USD, up more than 23% year-on-year. Exports were nearly 123 billion USD, up 19.1%, while imports rose to 126.6 billion USD, up 27%.

The growth gap between the two directions resulted in a trade deficit of around 3.6 billion USD. In the same period last year, Vietnam recorded a surplus.

Exports: processing and manufacturing remain the main driver

On the export side, the processing and manufacturing sector continued to lead, accounting for nearly 90% of total exports. Several product groups remained large, including electronics, computers and components at about 16–17 billion USD; mobile phones and components at over 13 billion USD; and machinery, equipment and spare parts at about 12 billion USD.

Traditional sectors such as textiles and footwear also maintained steady growth, with textiles above 8 billion USD and footwear around 5 billion USD.

Agricultural products continued to contribute positively, but growth did not accelerate due to volatility in world commodity prices and increasing competition. As a result, export value increased but did not fully offset the sharp rise in imports.

Imports: production inputs expand alongside output recovery

Imports rose clearly, reflecting a recovery and expansion of production. Major import groups were production inputs: computers, electronics and components at around 28–30 billion USD; machinery, equipment and spare parts at about 20 billion USD; mobile phones and components at roughly 5–6 billion USD; and fabrics of all kinds at about 3.5–4 billion USD.

The group of petroleum products also recorded around 2.5–3 billion USD amid higher global energy prices.

Why the deficit appears: cyclical timing and higher input costs

Vietnam posted a 3.6 billion USD trade deficit in the first three months. The pattern reflects that more than 90% of import value is for production rather than consumption, a feature of a highly open economy integrated into global supply chains.

The Ministry of Industry and Trade said the Q1 deficit is cyclical and typically appears at the start of the year when firms boost imports of inputs and machinery to support new orders. Export growth often lags due to production progress and delivery timelines.

In addition, fluctuations in global commodity prices contributed to the rise in imports. Since late February, geopolitical tensions in the Middle East have pushed up oil and other inputs, increasing Vietnam’s import costs. This is particularly visible in energy items such as gasoline, liquefied petroleum gas, and related inputs for industrial production.

Trade structure: reliance on key supplier markets

Vietnam’s trade structure remains heavily dependent on imports from major partners including China, Korea and ASEAN. These markets supply a large share of materials, components and machinery for domestic production. As demand for production inputs grows, imports from these partners rise, contributing to the deficit.

Official view and outlook: deficit not necessarily alarming

Mr. Tran Thanh Hai, Deputy Director of the Import-Export Department at the Ministry of Industry and Trade, said the Q1 deficit is not alarming. He noted that sectors and firms have increased imports of machinery, equipment, materials and components to support production in coming quarters. For example, electronics, computers and components rose by more than 50% year-on-year to about 47.5 billion USD, while imports of other machinery and spare parts increased by 22.6%.

He added that Vietnam’s trade balance tends to fluctuate by quarter, with early-year deficits often offset by surpluses later when goods produced from imported inputs begin to be exported.

Issues to monitor: margins, exchange rates and macro stability

Experts said the development also raises issues to monitor. Rising input costs could affect firms’ profit margins, particularly as global competition intensifies. If the deficit persists, it could place upward pressure on the exchange rate, inflation and broader macroeconomic stability.

Given ongoing global trade uncertainties, including geopolitical risks and energy price volatility, maintaining a balance between export growth and import control remains a policy challenge. Over the long term, increasing domestic content, developing supporting industries and reducing reliance on imported inputs are cited as key solutions to improving the trade balance sustainably.