Vietnam credit growth forecast to hit 14% in 2021: Fitch Solutions

A GDP growth of 5.8% in 2021, nearly double the 2.9% growth last year, would boost credit demand.

Vietnam credit growth forecast to hit 14% in 2021: Fitch Solutions


Vietnam’s credit growth is forecast to expand by 14% in 2021, higher than the growth rate of 12.1% recorded last year, according to Fitch Solutions, a subsidiary of Fitch Group.

“We project GDP growth of 5.8% in 2021, twice as fast as the 2.9% gain posted in 2020, so improved economic conditions should result in stronger credit demand, particularly given already low interest rates,” stated the Fitch Solutions in a note.

Fitch Solutions previously forecast Vietnam’s GPD growth at 8.6% in 2021, however, a lower estimate came as tourism has not recovered as expected, added Fitch Solutions.

“Borders are not likely to reopen until a significant proportion of the population has been vaccinated,” stated Fitch Solutions, but, according to Oxford University data, just 0.69% of the population had received their first dose as of May 5.

As further support, Fitch Solutions expects the State Bank of Vietnam (SBV), the country’s central bank, to hold its policy discount and refinancing rates at 4.00% and 2.50%, respectively, particularly since inflation is within the central bank’s target range.

Consumer price inflation was nonexistent in 2020 but is likely to accelerate to average 6.8% in 2021. Due to base effects, inflation in the first half is likely to be higher than in the second half, allowing inflation to fall into the central bank’s target range before the end of the year.

With the global economy beginning to recover, Vietnam’s export sector is expected to benefit. However, the shortage of shipping containers and higher shipping costs could limit the contribution of manufacturing to the economic recovery. In addition, the global recovery may be uneven which may also constrain export growth and, by extension, the demand for Vietnamese manufactures.

 

On the positive side for growth, the construction sector is likely to benefit from higher public spending in 2021. In addition, the implementation of the public-private partnership law since January 1 2021 should result in faster implementation of capital projects. That said, the SBV has recognized that banks are taking on more risk in the property sector and is actively trying to reduce risk in real estate.

Loans to purchase automobiles would likely support the credit growth acceleration in the second half of 2020 as the government slashed vehicle registration fees by 50% for the purchase of domestically-produced vehicles until the end of 2020.

“If the timeframe for lower registration fees is extended, then we could see additional tailwinds to credit growth coming from the vehicle sector,” said Fitch Solutions.

Fitch Solutions, however, warned any reduction in domestic activity from the further spread of Covid-19 could result in weaker economic growth than its forecast.

“Since asset prices, both physical and financial, surged in Vietnam at the end of 2020, any restrictions in credit extension to reduce risk in the banking sector could result in weaker credit growth,” it concluded.

hanoitimes

Moody's affirms credit ratings for four Vietnamese banks

Moody's affirms credit ratings for four Vietnamese banks

Credit rating agency Moody's on May 26 affirmed its long-term domestic and foreign currency deposit and issuer ratings of four Vietnamese banks.

 
 

Other News

.
Vietnam named among world’s top 20 host economies for FDI for first time
Vietnam named among world’s top 20 host economies for FDI for first time
BUSINESSicon  19/07/2021 

Vietnam was named among the world’s top 20 host economies for foreign direct investment (FDI) for the first time in 2020 with an inflow of 16 billion USD.

Major transport projects to get underway this year, others to be completed
Major transport projects to get underway this year, others to be completed
BUSINESSicon  18/07/2021 

The Ministry of Transport plans to begin work on nine major infrastructure projects in the south this year to reduce traffic congestion and improve connectivity.

Support for businesses vital for economic recovery
Support for businesses vital for economic recovery
BUSINESSicon  18/07/2021 

During the current ongoing Covid-19 pandemic, it is of utmost importance that government authorities introduce policies that provide maximum support to keep businesses afloat, and sustain the economy as well.

Many hotels in HCMC increase room capacity
Many hotels in HCMC increase room capacity
BUSINESSicon  18/07/2021 

Many hotel owners in Ho Chi Minh City yesterday said that the number of booked hotel rooms has increased from 10 percent to 20 percent.

Hanoi targets GRDP growth up to 7.5% in 2021
Hanoi targets GRDP growth up to 7.5% in 2021
BUSINESSicon  18/07/2021 

Hanoi will take advantage of a shift in investment capital worldwide to attract foreign direct investment into the city.

ASEAN, Czech Republic look to standardise customs procedures
ASEAN, Czech Republic look to standardise customs procedures
BUSINESSicon  18/07/2021 

The Association of Southeast Asia Nations (ASEAN) Committee in coordination with the Customs Administration of the Czech Republic has held a webinar to introduce the electronic customs of the European country.

SBV allows banks to expand credit room
SBV allows banks to expand credit room
BUSINESSicon  18/07/2021 

The State Bank of Viet Nam (SBV) has just officially approved credit room extension for some banks.

Live streamers compelled to register with MIC if new draft decree adopted
Live streamers compelled to register with MIC if new draft decree adopted
BUSINESSicon  18/07/2021 

The Ministry of Information and Communications has proposed that only licensed social networking sites and accounts should be allowed to livestream to generate revenue.

VIETNAM BUSINESS NEWS JULY 18
VIETNAM BUSINESS NEWS JULY 18
BUSINESSicon  18/07/2021 

Over 425 million tonnes of cargo handled at seaports in seven months

Vietnamese top list of most online shoppers in SEA
Vietnamese top list of most online shoppers in SEA
BUSINESSicon  17/07/2021 

Vietnam has the highest number of people shopping on e-commerce platforms in the Southeast Asia region with some 49.3 million people, according to the E-commerce White Book 2021 released by the Vietnam E-Commerce and Digital Economy Agency.

Vietnam ‘promised land’ for digital banking
Vietnam ‘promised land’ for digital banking
BUSINESSicon  17/07/2021 

Vietnam is among the regional countries that are seeing new digital bank models, experts have said.

Textile and garment makers seek multitude of options
Textile and garment makers seek multitude of options
BUSINESSicon  17/07/2021 

As the current outbreak of the pandemic remains complicated, textile and garment makers fear lasting impacts on their operations, 

Bumps ahead for the giants of transport
Bumps ahead for the giants of transport
BUSINESSicon  17/07/2021 

After enduring months of losses, state-owned transport giants Vietnam Railways and Vietnam Airlines are pinning hopes on a financial lifebuoy to recover from the incurred losses – but even significant support may not be enough for them.

Tardy public spending will hinder post-pandemic economic recovery
Tardy public spending will hinder post-pandemic economic recovery
BUSINESSicon  17/07/2021 

The COVID-19 health crisis and the resulting economic downturn has thrown a spanner in the works of already tardy public spending, hindering Vietnam’s efforts to revive its post-pandemic economy and speed up slowing GDP growth.

Vietnam moving out of the epidemic more slowly than others, needs new policies
Vietnam moving out of the epidemic more slowly than others, needs new policies
FEATUREicon  18/07/2021 

Prime Minister Pham Minh Chinh affirmed that Vietnam’s development goals have not changed and agreed with the two GDP growth scenarios for 2021 developed by the Ministry of Planning and Investment.

Vietnam among top 20 FDI destinations in the world
Vietnam among top 20 FDI destinations in the world
BUSINESSicon  16/07/2021 

For the first time, Vietnam is among the top 20 countries attracting the most foreign direct investment (FDI) capital in the world, according to World Investment Report 2021 by the United Nations Conference on Trade and Development (UNCTAD).

Six cities and provinces to pioneer in use of e-invoices
Six cities and provinces to pioneer in use of e-invoices
BUSINESSicon  16/07/2021 

The General Department of Taxation plans to launch the electronic invoice system at tax departments in Ha Noi, HCM City, Quang Ninh, Hai Phong, Phu Tho and Binh Dinh by the end of this year before rolling it out nationwide in 2022.

VIETNAM BUSINESS NEWS JULY 17
VIETNAM BUSINESS NEWS JULY 17
BUSINESSicon  17/07/2021 

Businesses have expressed their hope that customs agencies and relevant ministries and sectors will further simplify administrative procedures, which, they suggested, should be completely handled online, according to a survey.

New money into stock market slows down, economy growth may miss expectations
New money into stock market slows down, economy growth may miss expectations
BUSINESSicon  16/07/2021 

In its recent report, Dragon Capital said that the market uptrend is still led by new individual investors.

Three mobile network providers seek permission to launch mobile money services
Three mobile network providers seek permission to launch mobile money services
BUSINESSicon  16/07/2021 

Three mobile network operators - Viettel, VNPT and MobiFone - have applied for the implementation of their own Mobile Money pilot projects.

 
 
 
Leave your comment on an article

OR QUICK LOGIN