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Thursday, July 25, 2024

Credit growth trajectory

By Le Hoai An - Nguyen Thi Ngoc An

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The credit growth trajectory in the first six months of this year shows many similarities to the same period of last year, characterized by slow growth. Challenges for the Vietnamese economy The Vietnamese economy is under intense pressure due to weak domestic consumption and export performance amid unpredictable conditions in major markets such as the U.S., Europe, and China. To address these difficulties and stimulate growth, the State Bank of Vietnam (SBV) has introduced various measures to beef up lending, but as of mid-June 2024, credit had grown by a mere 3.79%. Businesses are struggling, demand for loans is low, and bad debt pressure makes banks cautious in making new loans. Despite a reduction in lending rates, demand for credit has not recovered as significantly as expected. In the first quarter of this year, many banks reported negative credit growth, especially those focused on retail lending. By May, with little improvement in consumer spending, corporate lending became the main driver of credit growth in the banking sector. Weak credit growth background Since GDP expanded by a substantial 5.66% in the first quarter, the economy has still been grappling with multiple challenges amid global economic uncertainties. Various organizations have predicted Vietnam’s […]
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