Vietnam economy set to rebound this year
Credit growth likely to hit 14% to 15%
HANOI: The Vietnamese economy recovered more slowly than the world economy last year, but the reverse is likely to be true this year, says Bank for Investment and Development of Vietnam chief economist Can Van Luc.
Luc had three possible scenarios for the Vietnamese economy in 2022. In the best-case scenario, the economy is expected to rebound strongly with an annual growth rate of 6% to 6.5%.
The figure is adjusted down to 5.5% to 6% in the base-case scenario, and to 4.5% to 5% if things do not turn out well.
Meanwhile, inflation is believed to rise steadily due to global inflationary pressures.
“I’m quite sure that the Vietnamese inflation will rise to around 3.8% to 4.2% this year. It’s inevitable amid rapid-rising global inflation,” he said at the conference on “Vietnam Financial Market 2021 and Outlook 2022”.
Additionally, Luc was optimistic that the securities market is likely to become more sound and stable after several corrections. The Vn-index is forecast to rise slightly by 7.7% to reach 1,614 points in the best-case scenario.
Regarding the banking system, credit growth is expected to hit 14% to 15% while the non-performing loan ratio would be kept at around 2%. Pre-tax profits of credit institutions are estimated to grow by 20% to 25% against 2021.
The insurance market is also expected to do well in 2022 profit-wise with a growth of 18% to 20%. However, profits from investment activities are likely to stay lower than in 2020 and 2021.
Economic expert Le Xuan Nghia believed that the corporate bond market is a capital-raising channel more important than medium and long-term bank loans. It is the case because corporate bonds are more flexible than bank loans.
“When bonds mature, firms can issue new bonds to service the due bonds. They can not do the same for bank loans,” he explained.
The expert feared that the currently-stagnated bond market would hold back ongoing bond-financed projects and stifle new projects, putting firms at risk of defaults.
He was also concerned that the stagnation would freeze the realty market and drive many banks to a critical situation.
He called for transparency and accountability in the bond market to solve the problem.
Pham Xuan Hoe, secretary-general of Vietnam Financial Leasing Association, estimated total financial assets in the economy at over 300% of gross domestic product. The ratio was so high that it signalled a structurally-problematic real economy.
“Such a high ratio is the main cause for turbulence in Vietnamese financial markets in recent years,” he said.
— Viet Nam NEWS/ANN