A bank teller counts Vietnamese banknotes. The Vietnamese economy is now less dependent on the credit growth

The ministry delivered its report at a session of the National Assembly’s Economic Committee in Hanoi on October 4.

The Government is likely to meet all 12 major socioeconomic targets assigned by the legislative body for this year, of which five goals are poised to reach beyond expectations, according to the ministry.

The ministry also predicted that the country’s gross domestic product (GDP) for this year will grow by 6.8%, and the inflation rate will stand at 2.7-3%, far below the ceiling level of 4%.

The scale of the national economy is estimated at some US$266.5 billion, while per capita income is, on average, US$2,786, compared with the 2018 figure of US$2,590.

The labor productivity growth will hover around 5.9% this year, so the rate for the 2016-2019 period is expected to reach 5.8% per year, higher than the five-year target of 5.5%.

Vietnam’s economic growth is focusing more on science, technology and innovation. Also, the ratio of total factor productivity (TFP) to GDP will reach 42.7%.

For example, the proportion of the processing and manufacturing sector to GDP rose from 14.3% in 2016 to 15.3% in 2017 and 16% in 2018. However, the mineral mining sector's share dropped to 8.1%, 7.5% and 7.4%, respectively.

The ministry states that the monetary, credit and forex markets have strong liquidity, thus ensuring a continued supply of money for the economy, especially in priority sectors.

The restructuring of credit institutions, especially those proven ineffective, is aligned with the settlement of non-performing loans (NPLs), or bad debts, which helps to maintain the stability and safety of the credit system.

As of late June this year, the rate of NPLs, as stated on their balance sheets was 1.91%, while the ratios of on-balance bad debts and those sold to the Vietnam Asset Management Company (VAMC), as well as potential debts, fell sharply to 5.39%, compared with 10.08% in end-2016, 7.36% in 2017 and 5.85% in 2018.

Credit institutions have seen significant improvements in their financial and governance capacity, credit quality, and transparency. By end-June, their charter capital had increased by 1.05%, compared with late last year, while their total owner’s equities had expanded 9.63%, as well.

So far this year, nine banks have fulfilled minimal capital requirements, based on Basel II, an international business standard that requires financial institutions to have enough cash reserves to cover risks incurred by operations. SGT