The State Bank of Vietnam (Photo: cafef.vn) Hanoi (VNA) – Economists have given bright outlook to Vietnameseeconomy, with the State Bank of Vietnam (SBV)’s credit growth target of 14percent achievable.
According to Nguyen Duc Thanh, Director of the Vietnam Institute for Economicand Policy Research under the Vietnam National University-Hanoi’s University ofEconomics and Business, as the economy gained its momentum in 2018, creditexpansion is expected to continue its stable status this year.
Vietnam’seconomic growth traditionally relied heavily on increased credit, however,things have changed. Economy can grow without strong lending, particularly whenthe support industry as well as the services and agricultural sectors nowbecome more attractive to foreign investors.
Meanwhile, Assoc. Prof. Dinh Trong Thinh from the Academy of Finance said thatthe growth should be on the scale of 12.5-14 percent as the businesses willexpand operation by mobilising capital from the securities market.
Bao Viet Securities Joint Stock Company (BVSC) expects credit growth in thenext three- five years at 14 percent per year, lower than the 2015-2017 period(average 18.1 percent).
According to the firm’s report, the Vietnamese economy will slow down to6.4-6.5 percent, resulting in a slump in local enterprises’ demand for capitalto enlarge their operation. In addition, borrowing is said to be affected by anincrease of 0.25-0.5 percent in lending rate in 2019.
Meanwhile, the SBV tighten loans for the property sector by increasing riskweighting from 200 percent in the beginning of 2018 to 250 percent one yearlater. At the same time, the bank restricts using short-term capital forlong-term lending from the outset of 2019.
In January, the bank set the 2019 credit growthtarget equivalent to the previous year at about 14 percent.
According to its Deputy Governor Nguyen ThiHong, credit will still be focused on priority fields, ensuring risk controland supporting economic growth.
In 2018, the SBV concertedly and flexiblyimplemented monetary policy instruments to stabilise the currency and foreignexchange markets, contributing to controlling inflation at 3.54 percent (thefifth consecutive year when inflation was curbed below 4 percent) andsupporting economic growth at 7.08 percent – the highest level in the past 11years.
The bank willcontinue adopting flexible and harmonious monetary, fiscal, and macroeconomicpolicies to keep inflation under 4 percent again this year; keep a close watchon the developments of the macroeconomy, as well as domestic and internationalfinancial and monetary markets; while monitoring monetary policy instruments ina proactive and prudent way to stabilise the currency and foreign exchangemarkets.
Besides, it will actively implement measures tolimit dollarisation in the country and increase public confidence in VND, thuscontributing to stabilising the foreign currency and macroeconomic markets.
The SBV will direct credit institutions toincrease the quality of credit packages, focusing on the Government’s prioritybusiness fields, and enabling businesses and locals to access credit capital.
It will improve a legal framework to support baddebt settlement and the reshuffle of credit organisations. –VNA.
VNA
