HANOI (Xinhua):- Despite decreasing interest rates and abundant credit growth quota, it is difficult for Vietnamese commercial banks to promote lending in the context of difficult economic conditions and reduced consumption in the market, local newspaper Vietnam News reported on Monday (July 31).
Although the State Bank of Vietnam has taken moves to boost lending, credit growth of the economy is still too slow, with an increase of only 4.73 per cent as of June 30 this year compared to the end of 2022, the lowest level for the past 10 years.
The central bank has loosened its monetary policy this year quite strongly to fulfill the requirement to push capital for economic recovery as directed by the government, but it is difficult for the economy to absorb this capital, the newspaper said, citing local experts.
The weak capital absorption is mainly due to the high number of enterprises that had to temporarily suspend business and dissolve in the first half of 2023, and the gloomy economic outlook that caused many firms to refrain from investing in expanding business and production, the newspaper cited an economic report released in July 2023 as saying.
"It will still be difficult for Vietnam to have a breakthrough in economic growth in the second half of this year, as the country's economy is still heavily dependent on export," the report said.
Under the context of the strong loosening of monetary policy, experts have also warned state management agencies to come up with solutions to control the lending mechanism to boost loans to productive firms and avoid the capital flow into risky areas or firms that serve as "backyards" of banks, which will further exhaust the economy, the newspaper reported.
