Low credit growth is probably both the cause and the effect of low economic growth and a fall in investment and consumption. Lower-than-expected credit growth Credit growth has decelerated from a peak of 16.94% year-on-year in September 2022, despite a move by the State Bank of Vietnam (SBV) in the fourth quarter last year to raise credit growth limits for many banks. In February 2023, credit growth bounced back a little before slowing down to 9.24% in June. The credit growth trajectory explains why the economic growth rate went down in the year’s first half alongside stagnant investment and consumption, which was the lowest over the past several years except the 2020-2021 period when the economy was battered by the Covid-19 pandemic. In 2021, the credit growth rate throughout the months still hovered around 14% to 15% year-on-year, while in 2020, the rate hit the bottom of 9.58% in May before bouncing back in the following months. Low credit growth is probably both the cause and the effect of low economic growth and a fall in investment and consumption. Many reports have pointed out how enterprises faced hardships, especially a lack of new orders for production since the fourth quarter […]
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