AsemconnectVietnam - At the press conference announcing the Review Report - Update on Vietnam's economic situation with the theme "Reaching new heights in the capital market" held on August 26, 2024, WB experts said that Vietnam's credit growth has improved but is still lower than the State Bank's target of 15% for 2024 despite a very favorable interest rate environment, showing that domestic investment demand is still weak.

At the same time, the quality of bank assets remains a concern from 2023 when the ratio of bad debts and credit loss provisions increases. The system-wide bad debt increased sharply, from 1.9% in 2022 to 4.6% of total outstanding loans in 2023.
The WB also stated that debt restructuring measures to respond to the pandemic, which continue to be extended and are expected to end in December 2024, could make the bad debt ratio even higher. The expected need for increased provisions, additional provisions for loan losses, is putting additional pressure on the profits of banks, which are already being squeezed due to the slowdown in net income from interest, fees and commissions.
The need for economic support and stimulus packages will gradually decrease
Ms. Dorsati Madani, a senior economist at the WB, recommended that in the banking and finance sector, it is necessary to continue to improve the capital adequacy ratio, strengthen the institutional framework, improve the effectiveness of supervision by strengthening legal protection for supervisory agencies, and ensure better policy and institutional infrastructure.
Vietnam also needs to continue to strengthen the legal environment for essential services such as information and communication technology, electricity, transportation, etc., because these are the areas that create future infrastructure to attract private investment - an extremely important point for economic growth. Along with that, it is necessary to continue to promote trade diversification, enhance regional integration and connectivity, seek and diversify export markets. Strengthen the private economic ecosystem in the global supply chain. Based on the above issues, WB experts forecast that Vietnam's economy will grow by 6.1% in 2024 and 6.5% in 2025 and 2026, higher than the 5% in 2023.
At the press conference, discussing further on the issue of adjusting fiscal policy, Mr. Andrea Coppola, Chief Economist of the WB, emphasized that the Vietnamese Government has implemented a loose fiscal policy in the past to support businesses and people. However, up to now, Vietnam's economy has achieved quite positive growth, even forecasted to reach 6.5% in 2025-2026, so the need to use support and economic stimulus packages will gradually decrease.
Therefore, this person said that the Vietnamese Government is considering returning fiscal policies to normal, that is, applying tax and fee policies as before the Covid-19 pandemic.
CK
Source: VITIC/ haiquanonline.com.vn