Total credit growth of Vietnam’s economy rose only 1.14% in the first two months whilst its broadest measure of total money, M2, grew 1.39% from the same period last year, the State Bank of Vietnam, the country’s central bank, said a statement.
Total deposits were down 0.17% in the period, mainly because of an on year fall of 5.94% in deposits by economic institutions, the central bank noted, adding savings by locals were up 5.57%, however.
The central bank targets M2 expansion of 28% and keep credit growth at 25% for 2010, which means that there is a big room for sharp expansion.
Credit growth is normally low in the Jan-Feb period that includes the Lunar New Year or Tet as cash demand is high. Last year the country’s credit growth started accelerating from March and peaked in the second quarter. In 2009 total outstanding loans grew by 4.11% in March, by 4.33% in April, by 4.01% in May and by 4.44% in June.
Inflows are forecast to rise as the government will kick-start its key investment projects soon plus its decisions to force state-run companies to sell their dollar deposits to local banks by end-Feb and gold trading floors to close by end-March.
Still, the central bank allowed local banks to provide medium and long-term loans with negotiable interest rates. The central bank said Wednesday that local banks have VND30 trillion to lend compared to VND13 trillion prior to the holiday.
Local banks also have raised US$500 million funds to lend, the central bank said.
Minister Nguyen Tan Dung urged ministries and sectors Wednesday to focus on macroeconomic stability and to speed up the disbursements of official development assistance (ODA) and foreign direct investment (FDI) after only US$129 million in development aid were spent in the first two months of the year.
Vietnam’s economy is forecast to grow 5.7%-5.9% in the first quarter compared to 3.1% in the same period last year. Trade deficit is predicted to be US$2.6 billion by end-March, the government’s General Statistics Office forecast. (SBV)
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