The State Bank of Vietnam (Photo: cafef.vn)

Hanoi (VNA) – Economists have given bright outlook to Vietnamese economy, with the State Bank of Vietnam (SBV)’s credit growth target of 14 percent achievable.

According to Nguyen Duc Thanh, Director of the Vietnam Institute for Economic and Policy Research under the Vietnam National University-Hanoi’s University of Economics and Business, as the economy gained its momentum in 2018, credit expansion is expected to continue its stable status this year.

Vietnam’s economic growth traditionally relied heavily on increased credit, however, things have changed. Economy can grow without strong lending, particularly when the support industry as well as the services and agricultural sectors now become more attractive to foreign investors.

Meanwhile, Assoc. Prof. Dinh Trong Thinh from the Academy of Finance said that the growth should be on the scale of 12.5-14 percent as the businesses will expand operation by mobilising capital from the securities market.

Bao Viet Securities Joint Stock Company (BVSC) expects credit growth in the next 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 to 6.4-6.5 percent, resulting in a slump in local enterprises’ demand for capital to enlarge their operation. In addition, borrowing is said to be affected by an increase of 0.25-0.5 percent in lending rate in 2019.

Meanwhile, the SBV tighten loans for the property sector by increasing risk weighting from 200 percent in the beginning of 2018 to 250 percent one year later. At the same time, the bank restricts using short-term capital for long-term lending from the outset of 2019.

In January, the bank set the 2019 credit growth target equivalent to the previous year at about 14 percent.

According to its Deputy Governor Nguyen Thi Hong, credit will still be focused on priority fields, ensuring risk control and supporting economic growth.

In 2018, the SBV concertedly and flexibly implemented monetary policy instruments to stabilise the currency and foreign exchange markets, contributing to controlling inflation at 3.54 percent (the fifth consecutive year when inflation was curbed below 4 percent) and supporting economic growth at 7.08 percent – the highest level in the past 11 years.

The bank will continue adopting flexible and harmonious monetary, fiscal, and macroeconomic policies to keep inflation under 4 percent again this year; keep a close watch on the developments of the macroeconomy, as well as domestic and international financial and monetary markets; while monitoring monetary policy instruments in a proactive and prudent way to stabilise the currency and foreign exchange markets. 

Besides, it will actively implement measures to limit dollarisation in the country and increase public confidence in VND, thus contributing to stabilising the foreign currency and macroeconomic markets.

The SBV will direct credit institutions to increase the quality of credit packages, focusing on the Government’s priority business fields, and enabling businesses and locals to access credit capital.

It will improve a legal framework to support bad debt settlement and the reshuffle of credit organisations. –VNA.