Moderate credit growth positive for Vietnam’s economy

20th May, 2019 10:31:30 printer

Hanoi: Despite credit growth among Vietnamese credit institutions remaining low this year, experts are not concerned about the slowdown, saying it was a good sign for the economy.

Reports from the State Bank of Viet Nam (SBV) showed credit growth as of April 17 this year had expanded by 3.23 per cent against the end of 2018, the lowest rise in the last four years. The rates during the same periods of 2018, 2017 and 2016 were 5 per cent, 5.2 per cent and 4.2 per cent, respectively, report agencies.

Can Van Luc, chief economist of the Bank for Investment and Development of Vietnam (BIDV), said he was not surprised at the moderate credit growth, explaining the SBV had targeted controlling credit growth since the beginning of this year to curb inflation and stabilise the macro-economy.

According to Luc, local firms were no longer too dependent on bank loans as they could raise capital from the securities and bond markets. The domestic market had also witnessed new capital supply channels, such as fintech and peer-to-peer companies. As a result Luc said moderate credit growth was a good sign for the economy.

In addition, restructuring of bank loans had improved, he said, explaining that bank loans were pouring into the production and business sectors, which were key drivers for the country’s economic growth.