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Ho Chi Minh City
Tuesday, June 18, 2024

Still in bad shape

By V. Dung

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The real estate sector has continued to face challenges even after multiple rounds of interest rate cuts. It has struggled to absorb the available capital, causing businesses to be cautious about taking on loans due to a lack of promising growth opportunities. This caution raises concerns about their ability to manage existing debts. Consequently, banks find themselves with excess cash but struggle to find willing borrowers. This situation has a detrimental impact on economic activity and hinders the flow of credit. A new approach is needed to address these issues. Demand slump stalls credit growth The real estate sector has dominated credit allocation, overshadowing other industries and raising concerns about overheating and imbalances. Data from the State Bank of Vietnam (SBV) showed that outstanding loans for the real estate sector had amounted to VND2.74 quadrillion by the end of September, a 6.04% increase against the end of 2022. This accounts for 21.46% of the total outstanding loans in the economy. Notably, 64% of this credit is used for personal purposes, while the remaining 36% supports real estate business activities. A recent study by the Vietnam Real Estate Research Institute (VIRES) suggested that monetary policy options are limited, with interest rate […]
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