Vietnam central bank fights to save economy

Vietnam’s central bank is facing a dual challenge of jump-starting the country’s economy, which has been experiencing slow growth in bank loans, while also ensuring that inflation remains under control. This issue was addressed by State Bank governor Nguyen Thi Hong during a national broadcast to lawmakers.

As of October 27, the nation’s bank credit growth was recorded at 7.1% from the end of the previous year, which falls significantly short of the government’s 2023 loan growth target of 14% to 15%.

Governor Nguyen Thi Hong emphasised the need for policies that not only respond to immediate developments but also provide fundamental solutions for the medium- and long-term. This comprehensive approach is crucial to maintaining sustainable macroeconomic balance.

Vietnam’s economy, which heavily relies on exports, is expected to grow by around 5% this year, falling short of the government’s 2023 gross domestic product target of 6.5%. Prime Minister Pham Minh Chinh has highlighted the complex and unpredictable nature of the global economy, which has put pressure on Vietnamese factories that export various goods, including sneakers and smartphones.

To address these challenges, the central bank has been implementing policies to stimulate lending while ensuring liquidity in the banking system. Additionally, it has taken measures to reduce lending interest rates for new loans by approximately 2 percentage points compared to the previous year.

The State Bank has been actively facilitating connections between businesses and banks through meetings, conferences, and seminars held throughout the country. This is especially important as about 95% of Vietnamese companies are small and medium-sized businesses.

Furthermore, the central bank has been directing lenders to streamline administrative costs and procedures to expedite the distribution of loans, aiming to boost economic growth and improve access to credit for businesses and individuals.