Oil slump costs Vietnam US$2.5bil in export losses this year

During the period, the country exported more than 5.7 million metric tonnes of crude oil, fetching more than US$2.56 billion, much below the level for the same period last year when it earned more than US$5.04 billion from shipment of 5.9 million metric tonnes.

According to Reuters, US oil prices in the global market traded below US$40 a barrel, ending 2% lower on August 21 on signs of US oversupply and weak Chinese manufacturing, and notching the longest weekly losing streak in almost three decades. US crude dipped below the US$40 threshold for the first time since the 2009 financial crisis.

Brent oil also ended US$1.16, or 2.5%, lower at US$45.46 a barrel. It hit a low of US$45.07 and threatened to break below US$45 a barrel for the first time since March 2009, Reuters reported.

According to experts, the oil price drop will help boost the country's production and manufacturing sector, and increase GDP significantly.

Deputy director of the Ministry of Finance's Institute of Economics and Finance, Nguyen Duc Do, said the domestic production would benefit from the fuel price drop as it contributed to cutting input costs.

Falling fuel prices have contributed to a cut in local production costs. — VNA/VNS Photo Doan Tuan

Economist Bui Trinh also estimated that a 20% fuel price drop would help cut roughly 0.8% of input costs in the first stage and another 0.3%-0.5% in the next stage.

The falling oil prices will also enable the country to keep inflation within control and stabilise the macro-economy.

Minister of Planning and Investment Bui Quang Vinh estimated that if oil price in the domestic market reduced by roughly 10%, local consumer price index would drop by roughly 0.55% and GDP may increase by 0.91%.

Vietnam's inflation in the first eight months of this year rose only 0.83% from the same period last year, according to the General Statistics Office.

However, the fuel price drop would cause a negative impact on the country's State budget as the collection from crude oil contributes significantly to the budget.

According to the Ministry of Planning and Investment, if crude oil price hovers at US$40 per barrel, the State budget will lost roughly VND11.5 trillion (US$510 million).