Participants at the conference (Photo: VNA) BIDV Chief Economist Can Van Luc made the forecast at the conference “Vietnamfinancial market 2021 and outlook 2022” on May 25.
Luc had three possible scenarios for the Vietnamese economy in 2022. In thebest-case scenario, the economy is expected to rebound strongly with an annualgrowth rate of 6-6.5 percent.
The figure is adjusted down to 5.5-6 percent in the base-case scenario, and to4.5-5 percent if things do not turn out well. Meanwhile, inflation is believedto rise steadily due to global inflationary pressures.
“I’m quite sure that Vietnamese inflation will rise to around 3.8-4.2 percentthis year. It’s inevitable amid rapid-rising global inflation,” he added.
Additionally, Luc was optimistic that the securities market is likelyto become more sound and stable after several corrections. The VN-Index isforecast to rise slightly by 7.7 percent to reach 1,614 points in thebest-case scenario.
Regarding the banking system, credit growth is expected to hit 14-15 percentwhile the non-performing loan ratio would be kept at around 2 percent. Pre-taxprofits of credit institutions are estimated to grow by 20-25 percent against2021.
The insurance market is also expected to do well in 2022 profit-wise witha growth of 18-20 percent. However, profits from investment activities arelikely to stay lower than in 2020 and 2021.
Economic expert Le Xuan Nghia believed that the corporate bond market is acapital-raising channel more important than medium- and long-term bank loans.It is the case because corporate bonds are more flexible than bank loans.
"When bonds mature, firms can issue new bonds to service the due bonds.They can not do the same for bank loans," he explained.
The expert feared that the currently-stagnated bond market would hold backongoing bond-financed projects and stifle new projects, putting firms atrisk of defaults.
He was also concerned that the stagnation would freeze the realty market anddrive many banks to a critical situation. He called for transparency andaccountability in the bond market to solve the problem.
Pham Xuan Hoe, Secretary-General of Vietnam Financial Leasing Association,estimated total financial assets in the economy at over 300 percentof GDP. The ratio was so high that it signalled astructurally-problematic real economy.
"Such a high ratio is the main cause for turbulence in Vietnamesefinancial markets in recent years," he said.
The secretary-general also highlighted asset leasing as an effective financialchannel for firms, notably small- and medium-sized businesses. However, legalframeworks for the channel have been outdated and need to be replaced tounlock its potential.
Pham Thi Hoang Anh, Director of Research Institute for Banking, Banking Academyof Vietnam, opined that the State Bank of Vietnam had managed central exchangerates with much success. Notably, foreign reserves reached 114 billion USD bylate 2021.
"The abundant reserves will give SBV ample room to safeguardfinancial security," she said.
The director also revealed that total credit to commercial realestate hit 783 trillion VND by late March 2022, higher than the sameperiod in previous years but still in the safe zone.
Vu Nhu Thang, Vice Chairman of the National Financial Supervisory Commission,was concerned that risks in the realty market might spill over into the bankingsystem and securities market, putting firms on the line.
“The size of the contagion effects depends on the volume of theprivately-placed bonds issued by realty firms and the volume of those heldby banks,” he stressed.
He also underlined Circular 16 issued by the SBV in 2021 as a timely regulationthat constrained banks’ privately-placed bond ownership, effectivelycurbing the spillover./.
VNA
