HCMC – Prime Minister Pham Minh Chinh today, March 14, highlighted positive improvements across a range of industries as he addressed a conference on monetary policy for fostering economic growth.
The year 2023 ended on a positive note, with the macroeconomy stabilized, inflation controlled, and economic growth sustained, he said.
He noted that fundamental monetary stability had been achieved, public debt put under control, and prudent budget expenditure maintained.
As a result, the Government was able to save VND560 trillion, which would be allocated for salary reforms starting July 1, 2024, including plans to increase minimum wages in the non-state sector. These measures are aimed at enhancing social security and improving people’s lives.
The Government remains committed to prioritizing anti-corruption efforts and bolstering national defense and security to achieve significant milestones in foreign affairs and international integration.
Despite the promising economic rebound seen in early 2024, the PM warned against global economic uncertainties. On the domestic front, credit growth has remained sluggish, leading to excessive liquidity in the banking system.
Credit in the first two months of 2024 declined compared to the end of 2023, according to data from the State Bank of Vietnam (SBV). As of February 29, total outstanding loans had decreased 0.72% over December 2023.
The State Bank of Vietnam (SBV) reported a decrease in deposit and lending rates. The average deposit rate for new savings at commercial banks dropped to 3.3% per year, down by 0.2 percentage point from December of the previous year.
Lending rates for new loans have decreased, now standing at 6.4% per year, a decline of 0.7 point over late 2023. However, interest rates on existing loans remain high.
The SBV reported that outstanding loans for most industries of the economy slid in the first two months of the year, except for the real estate sector, which edged up by 0.23% over December, and the securities sector, which improved by 2.56% over December.
This deceleration in credit growth is attributed to low demand and limited capital absorption in the economy. Inflation pressures, rising material prices, and a lack of orders have led many businesses to downsize or halt operations.
High input costs and production costs have made loans less appealing, prompting businesses to save more and borrow less. Real estate loans, which account for 21% of total outstanding loans, can significantly influence overall credit availability when they fluctuate.
Certain customer groups, particularly small and medium-sized enterprises (SMEs), still have difficult access to bank loans due to limited collateral, capacity, or inadequate business plans. Banks remain cautious due to the increasing amount of bad debt.
Unresolved issues in the bond and real estate markets further impede access to capital.
