What’s behind the figures about growth, inflation rates and bad debts?
VietNamNet Bridge – International observers highly appreciate the inflationdecrease in Vietnam, but keeps cautious with their predictions about the growthprospect 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, HSBCand ANZ all emphasized the achievements of the government of Vietnam in curbinginflation. With the consumer price index (CPI) increase slowing down in recentmonths, Vietnam now has favorable conditions to slash bank loan interest ratesto help stimulate economic growth.
“Vietnam at a glance” – the report by HSBC released on August 1, commented thatthe Vietnamese authorities have sent signals of getting ready to push thenational economy ahead. In 2011, the measures to tighten credit were appliedwhich has brought the desired effects. The CPI only increased by more than fivepercent in July, much lower than the sharpest increase of 23 percent seen inlast August.
Other macroeconomic improvements such as the trade deficit decrease, stabledong/dollar exchange rate and foreign currency reserve increase have alsorecognized by the international institutions.
The trade deficit in the first seven months of the year dropped to 58 milliondollars from 6 billion dollars of the same period of the last year. Thedong/dollar exchange rate has been stable since the beginning of the year, whilethe foreign currency reserves have increased thanks to the trade deficitdecrease and the strong foreign direct investment disbursement.
Moody’s report released on August 8 also said that the macroeconomic stabilityhas been resumed thanks to the implementation of the measures to tighten themonetary policies since early 2011.
However, ANZ’s analysts still keep cautious about the Vietnam’s nationaleconomy, saying that the inflation decreases show the demand fall, which is theobstacle 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 itwas 16.9 percent in June 2011.
Sharing the same view with ANZ, HSBC experts have warned that Vietnameseenterprises are now facing the low demand in both the domestic and foreignmarkets. The PMI, price management index, in July, announced by HSBC, hasdropped 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 thehigh 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 incomparison 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’scredit growth, saying that this is really a worrying problem of the Vietnam’snational economy at this moment.
HSBC’s report pointed out that the decline in the credit growth rate (less thanone percent so far this year) reflects a lot of problems, including the weakdomestic demand – a phenomenon of the structural weak points.
Regarding the bad debts, Moody commented that fragile factors of the Vietnamesebanking system in the post- credit boom have been exposed.
The reports released in late July and early August 2012 by JP Morgan Chase, HSBCand ANZ all emphasized the achievements of the government of Vietnam in curbinginflation. With the consumer price index (CPI) increase slowing down in recentmonths, Vietnam now has favorable conditions to slash bank loan interest ratesto help stimulate economic growth.
“Vietnam at a glance” – the report by HSBC released on August 1, commented thatthe Vietnamese authorities have sent signals of getting ready to push thenational economy ahead. In 2011, the measures to tighten credit were appliedwhich has brought the desired effects. The CPI only increased by more than fivepercent in July, much lower than the sharpest increase of 23 percent seen inlast August.
Other macroeconomic improvements such as the trade deficit decrease, stabledong/dollar exchange rate and foreign currency reserve increase have alsorecognized by the international institutions.
The trade deficit in the first seven months of the year dropped to 58 milliondollars from 6 billion dollars of the same period of the last year. Thedong/dollar exchange rate has been stable since the beginning of the year, whilethe foreign currency reserves have increased thanks to the trade deficitdecrease and the strong foreign direct investment disbursement.
Moody’s report released on August 8 also said that the macroeconomic stabilityhas been resumed thanks to the implementation of the measures to tighten themonetary policies since early 2011.
However, ANZ’s analysts still keep cautious about the Vietnam’s nationaleconomy, saying that the inflation decreases show the demand fall, which is theobstacle 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 itwas 16.9 percent in June 2011.
Sharing the same view with ANZ, HSBC experts have warned that Vietnameseenterprises are now facing the low demand in both the domestic and foreignmarkets. The PMI, price management index, in July, announced by HSBC, hasdropped 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 thehigh 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 incomparison 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’scredit growth, saying that this is really a worrying problem of the Vietnam’snational economy at this moment.
HSBC’s report pointed out that the decline in the credit growth rate (less thanone percent so far this year) reflects a lot of problems, including the weakdomestic demand – a phenomenon of the structural weak points.
Regarding the bad debts, Moody commented that fragile factors of the Vietnamesebanking system in the post- credit boom have been exposed.
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