Falling Oil Prices Pinch Vietnam's Economy, Tourism
National budget relies on oil profits for key slice of spending; also, usual Russian visitors are tightening belts, staying away
Vietnam’s export revenues are expected to drop because of sliding oil prices, putting pressure on the national budget, which relies on oil profits for more than 10 percent of all spending. Oil prices have tumbled nearly 50 percent over the past few months, sending shock waves through Vietnam. Economist Le Dang Doanh said the country is facing a dilemma over the low price. The government "is very concerned that the fall would shrink the state budget," he said. "The Ministry of Finance said the country might lose more than $1 billion." However, Doanh said the fall in prices would also reduce Vietnam’s spending on imported petroleum products and help ease inflation. He added that Vietnamese consumers are benefiting from lower fuel and transportation costs as a result of the fall in oil prices. Tourism is another top earner of foreign currency for Vietnam, but it, too, is feeling the pinch of plummeting oil prices. Nha Trang, a beachfront city frequented by Russian tourists, is now experiencing slower business with a low rate of hotel occupancy. Russians are reportedly tightening their belts because of lower oil prices and Western economic sanctions that have devalued the ruble. Tran Ngoc Quyen, a local tourism official, said many tour operators have seen bookings canceled as tourists can no longer afford the expense. “This is supposed to be a peak season for local tourism, but the number of Russian visitors has dropped," Quyen said. "We are trying to find a solution to this difficult situation.” State media reports said there were similar stories of canceled Russian bookings at tourism hubs across Vietnam. Vietnam attracted 250,000 Russian tourists last year, up more than 70 percent from the previous year.