According to the National Statistics Office, Vietnam's total goods trade turnover reached $109.7 billion in August, up 31.7% from a year earlier. In the first eight months, the figure was $770.14 billion, up 28.7% year-on-year and the highest level ever recorded for the January-August period.

Exports reached $54.79 billion in August, up 3.2% from July and 26% from a year earlier. Imports, meanwhile, stood at $54.91 billion, down 3.1% month-on-month but still up 37.9% year-on-year.

The shift in the relative performance of the two sides of trade quickly narrowed the deficit. Vietnam's trade deficit fell to just $120 million in August from $3.59 billion in July.

Trade deficit narrows as imports cool

The August figures become more notable when viewed against the trend in previous months. Vietnam's trade deficit stood at $5.21 billion in May 2026 and narrowed to $2.64 billion in June before widening again to $3.59 billion in July. After seven months, the cumulative deficit had reached $20.52 billion.

In August, the trade balance was almost back to equilibrium. A deficit of just $120 million showed that the gap between exports and imports had narrowed significantly in a single month.

The main driver was the slowdown in imports. In the first eight months, imports reached $395.3 billion, up 35.3%, significantly faster than the 22.4% growth in exports. However, imports fell 3.1% from the previous month in August, while exports rose 3.2%.

This was an important shift because the widening gap between the growth rates of exports and imports had been the main factor behind the large trade deficits in previous months.

Still, the month-on-month decline in imports does not necessarily signal a slowdown in manufacturing activity. In the first eight months, capital goods and production inputs accounted for $372.04 billion, or 94.1% of total imports. The composition shows that most imported goods were still machinery, equipment, materials and other inputs for the economy.

This also ties in with the trend analyzed in July: a trade deficit is not necessarily a negative signal if foreign currency is being used to import production inputs that are subsequently converted into products, export orders and revenue.

The key question now is whether the low trade deficit recorded in August can be sustained in the final months of the year.

Behind the $20.46 billion deficit

Vietnam posted a cumulative trade deficit of $20.46 billion in the first eight months, compared with a trade surplus of $14.02 billion in the same period last year. So despite the sharp narrowing of the deficit in August, the cumulative trade balance remains under considerable pressure.

The divergence between the domestic and foreign-invested sectors remains particularly pronounced. The domestic sector recorded a trade deficit of $30.6 billion, while the foreign-invested sector, including crude oil, posted a surplus of $10.14 billion.

The FDI sector continued to account for 80.1% of total exports, with exports worth $300.37 billion, up 26.9%. The domestic sector, meanwhile, recorded exports of $74.47 billion, up just 7.4%, accounting for 19.9% of total exports.

These figures show that despite the improvement in the trade balance in August, the underlying structural issue remains unresolved. Trade volumes are expanding rapidly, but the ability of domestic companies to generate value and export remains significantly weaker than that of the FDI sector.

On the one hand, the fact that capital goods and production inputs accounted for 94.1% of imports shows that imported goods are largely supporting production and investment. On the other hand, if most machinery, components and raw materials still have to be sourced from abroad, the amount of value added retained in Vietnam will remain limited.

Therefore, what matters in the coming months is not only whether the trade balance returns to surplus, but also whether the narrowing deficit is driven by stronger exports or simply by slower imports.

If exports maintain their growth momentum while imports stabilize after their sharp increase, the trade balance has room to improve. In that case, foreign currency earnings from exports would help offset foreign currency demand for imports and ease pressure on the foreign exchange market.

Conversely, if imports continue to grow rapidly while exports fail to generate a corresponding increase in domestic value added, the trade deficit could become a structural issue rather than merely a short-term phenomenon.

After eight months, Vietnam's trade balance remains in a $20.46 billion deficit. But with the monthly deficit falling from $3.59 billion in July to just $120 million in August, the pace of deterioration has clearly begun to ease. This will be a key trend to watch in the final months of the year.