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ADB: Vietnam’s economy to grow at 5.1 percent in 2012 (04/10)
04/10/2012 - 12 Lượt xem
In April, the bank forecast GDP growth of 5.7 percent this year and 6.2 percent next year.
Vietnam
has been an export-dependent country relying heavily on the European
and US markets, which were also experiencing slow growth, said ADB
economist Dominic Mellor, at a press conference in Hanoi on October 3.
“However,
there are signs that GDP is picking up due to the cyclicality of GDP,
fiscal policy easing and consumption boosted by lower inflation,”
Mellor said.
ADB
country director for Vietnam Tomoyuki Kimura said that inflation was
projected at about 7 percent this year, well below the previously
projected 9.1 percent due to a sharp decline in food prices and
weaker-than-anticipated domestic demand.
Stabilization
measures taken last year dampened demand, slowing the trajectory of
economic growth, Kimura said. GDP therefore grew at a modest 4 percent
year-on-year in the first quarter and 4.7 percent I the second quarter,
resulting in growth of just 4.4 percent in the first half of the year.
Next
year, inflation is expected to rise to 9.4 percent because of increases
in global food prices, recovering domestic demand, and fiscal policy
easing, he added.
Kimura
acknowledged important steps taken to date to restructure the nation’s
banking system, such as the mergers of several weak banks. However, he
raised concerns over the risks of rampant cross-holdings among banks.
While
a large bank with a stake in smaller ones can support the liquidity of
these banks in difficult items as well as these banks in improving
governance, Vietnam needs clearer regulations on the issue to ensure
banks are transparent in publishing these cross-holdings, he said.
The
banking sector has been vulnerable as businesses have struggled and
property prices fallen, putting bank earnings under pressure, Mellor
said.
“Reported
capital adequacy ratios appear adequate, but uncertainties remain due
to the scale of bad debts, exposure to State-owned enterprises and
cross holding between banks.”
Interest
rates need to be targeted at stabilizing the value of the dong, which
can be bolstered by strong trade and capital flows that help improve
foreign reserves, Mellor added.
The
ADB’s Asian Development Outlook Update said merging weaker banks is an
important step. The authorities have also considered establishing a
State asset management company to buy bad debts from banks, but no
progress on the proposal is evident, the report noted.
To
attract foreign capital and expertise into banks, the Government is
considering an increase in the cap on foreign ownership in credit
institutions. However, strains in the domestic banking system and
reduced appetite for risk among international banks suggest that
drawing substantial foreign investment might be a challenge at this
time. It might also be difficult in the current environment to raise
capital through the domestic securities market.
“The
focus needs to remain on structural reforms,” said Kimura, adding that
a Government commitment to a credible reform roadmap with time-bound
actions should help revive lending and improve market confidence.
He
said confidence in the Government’s willingness to address structural
reforms will be enhanced with more data on the progress these reforms
are achieving towards targets. Greater disclosure of financial
information on State-owned enterprises and banks will provide a strong
signal to the market that the Government is committed to reform. /.
Source: VOV
Source: VOV
