Soaring bad debts a big problem, says Le Xuan Nghia

The statistics from the State Bank of Vietnam (SBV) revealed credit growth of as low as 0.76pct over the first half of the year whereas the year target is 15pct-17pct. Should the monthly rate for the second half of the year be 1.5pct or six-ending-month growth rate of 9pct, the year GDP could grow 5.3pct-5.4pct, assumed Dr Le Xuan Nghia, the member of the National Monetary and Financial Advisory Committee. As such, inflation rate for the next five months may rise by 0.5pct-1pct each month.

If the six-ending-month credit growth should gain 12pct, the year GDP is likely to grow 5.5pct-5.6pct, which could in turn trigger inflation in the following five months, he warned.

Deputy prime minister Nguyen Xuan Phuc said at the National Assembly meeting in June the economic gloom had almost been over. However, despite improved macroeconomic environment, microeconomic outlook has created a wide range of problems, the most worrying of which are soaring bad debts, argued Nghia.

What is worse is potential deflation unless economic stagnancy and mounting bad debts have been tackled, said Dr Vo Tri Thanh, vice director of the Central Institute for Economic Research and Management. Also, the market confidence has been considerably weakening over the recent times, he added.

“Though we have made late interest payments as well as got debts restructured for eleven years, lenders appear hesitant to grant loans”, said the manager of a Hanoi-based firm.

The total credit in the economy is presently estimated at as much as 2.5 million billion dong which is likely to be smoothly channelled into the economy on market confidence return, said Vo Tri Thanh.

 

Category: Economy