Suggestions for you

WB: Credit slows down despite policy easing, economy's absorptive capacity is still weak


The WB believes that the credit slowdown despite the SBV's policy easing and lending interest rate cuts in March and ample market liquidity may reflect the weak attractiveness of the economy.

In its just-released report, the World Bank (WB) said credit growth is estimated to have slowed to 9.2% (year-on-year) in April 2023, from 9.9% (year-on-year) in March and 12.2% (year-on-year) in February, the lowest level in recent years.

Credit slowdown despite the SBV's policy easing and lending rate cuts in March and ample market liquidity may reflect weak absorptive capacity of the economy.

The WB noted that Vietnam's economy is facing external headwinds as weak external demand continues to put downward pressure on exports, leading to weakening industrial production. Although domestic consumption remains strong, credit growth has slowed, reflecting weak credit demand.

In addition, the prospect of further tightening of global financial conditions requires foreign exchange management to be flexible to adapt to external conditions. Accelerating public investment disbursement can support aggregate demand and economic growth in the short term, while ensuring investments in human capital and green and resilient infrastructure to help drive economic growth in the long run.

The report also said that while FDI inflows are stable, global uncertainties continue to affect investor confidence.

Committed FDI reached USD 3.4 billion in April 2023, an increase of 46% compared to March. However, accumulated committed FDI capital in the first four months of 2023 only reached USD 8.8 billion, 17.9% lower than the same period in 2022. Disbursed FDI in April 2023 reached USD 1.5 billion, equivalent to that of a year earlier.

Meanwhile, accumulated disbursement of FDI from January to April 2023 reached USD 5.8 billion, equivalent to the same period in 2022. The slowdown in FDI commitments and disbursements in the first four months of 2023 may reflect investor caution due to global uncertainties, the WB emphasized.


Kylie Nguyen

© 2019 Vietnam Bank for Agriculture and Rural Development No. 2 Lang Ha street, Ba Dinh district, Hanoi, Vietnam
Follow us