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The report says, July’s inflation dipped to 5% from the peak of 23% in 2011 meanwhile trade deficit has fallen and foreign reserve increased. HSBC predicted that there would be another cut in the coming time as production continued rolling down.
Vietnamese policy-makers said they are ready to take necessary measures to spur economic growth. Some have been deployed since last year to tighten credit and hold back demand, leading to substantial decrease in trade deficit (US$58 million in July compared to US$6 billion of the same period).
HSBC said the Vietnam dong remains stable since the beginning of 2012 amid rising FDI inflow.
The Government has adopted a resolution with an aim to raise the efficiency of State-owned enterprises and banking system.
However, the country is now facing challenges, including low credit growth and heavy dependence on credit expansion for growth. The move to tighten credit growth reflects the Government’s commitment to settling bad debts of the banking system.
On the other hand, businesses are now suffering from shrinking domestic demand and weak global growth. In addition, people prefer saving to spending.
The future possible interest-rate cut HSBC may not strongly affect credit operations. The central bank could use administrative measures to convince commercial banks to lower lending rates.
The report says Vietnam is on the right track thanks to its measures to accelerate production./.
By Huong Giang