VietNamNet Bridge – International observers highly appreciate
the inflation decrease in Vietnam, but keeps cautious with their predictions
about the growth prospect and repeatedly express their worries about the bank
bad debts.
The inflation and GDP growth rates
The reports released in late July
and early August 2012 by JP Morgan Chase, HSBC and ANZ all emphasized the
achievements of the government of Vietnam in curbing inflation. With the
consumer price index (CPI) increase slowing down in recent months, Vietnam now
has favorable conditions to slash bank loan interest rates to help stimulate
economic growth.
“Vietnam at a glance” – the
report by HSBC released on August 1, commented that the Vietnamese authorities
have sent signals of getting ready to push the national economy ahead. In 2011,
the measures to tighten credit were applied which has brought the desired
effects. The CPI only increased by more than five percent in July, much lower
than the sharpest increase of 23 percent seen in last August.
Other macroeconomic improvements
such as the trade deficit decrease, stable dong/dollar exchange rate and
foreign currency reserve increase have also recognized by the international
institutions.
The trade deficit in the first
seven months of the year dropped to 58 million dollars from 6 billion dollars
of the same period of the last year. The dong/dollar exchange rate has been
stable since the beginning of the year, while the foreign currency reserves
have increased thanks to the trade deficit decrease and the strong foreign
direct investment disbursement.
Moody’s report released on August
8 also said that the macroeconomic stability has been resumed thanks to the
implementation of the measures to tighten the monetary policies since early
2011.
However, ANZ’s analysts still
keep cautious about the Vietnam’s national economy, saying that the inflation
decreases show the demand fall, which is the obstacle to the economic growth
recovery.
The bank’s report showed the
downward trend of the export turnover growth rate. The July’s export turnover
growth rate dropped sharply to 3 percent, while it was 16.9 percent in June
2011.
Sharing the same view with ANZ,
HSBC experts have warned that Vietnamese enterprises are now facing the low
demand in both the domestic and foreign markets. The PMI, price management
index, in July, announced by HSBC, has dropped to the deepest low since the
index was first launched in April 2011. This shows that consumers have been no
longer ready to spend money due to the high debts or the bad economic growth
prospect.
JP Morgan Chase seems to be more
optimistic in its report released in late July. The inflation rate in Vietnam,
not including the fuel and food price increases, stayed at 0.6 percent in July
in comparison with June, and 8 percent in comparison with the same period of
the last year.
The credit growth and bad debts
HSBC and ANZ do not have the same
viewpoint with JP Morgan Chase about Vietnam’s credit growth, saying that this
is really a worrying problem of the Vietnam’s national economy at this moment.
HSBC’s report pointed out that
the decline in the credit growth rate (less than one percent so far this year)
reflects a lot of problems, including the weak domestic demand – a phenomenon
of the structural weak points.
Regarding the bad debts, Moody
commented that fragile factors of the Vietnamese banking system in the post-
credit boom have been exposed.
Compiled by Thanh Mai
Business & Investment Opportunities
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