Banking Industry: A bright spot in Vietnam’s economic recovery journey

DNHN - In a press exchange with Mr Brook Taylor, General Director of VinaCapital Fund Management JSC, he highly appreciated the important role of the banking sector in supporting Vietnam’s economic recovery and growth.

From the perspective of an investment fund operating in Vietnam, Mr Brook Taylor, General Director of VinaCapital Fund Management JSC, said that despite facing many difficulties, the banking sector has fulfilled its tasks well, ensuring inflation control and supporting the economy to overcome challenges.

In fact, in the context of economic growth facing difficulties, the economy’s capital absorption and credit demand are still quite weak. In the first 11 months of 2023, the credit growth of the entire banking system reached only over 9% (by the end of 2023, it reached 13.71%), lower than the target set at the beginning of the year by the State Bank of Vietnam (SBV). The banking sector is also facing many challenges, such as an unfavourable international environment, increasing bad debts, risks of corporate bonds, the real estate market, etc.

Mr Taylor emphasised that the State Bank of Vietnam has implemented timely and effective solutions to help both the economy and the business community overcome difficulties. Flexible and proactive monetary policy in regulating credit growth targets, and the application of information technology in banking operations have played an important role in this process. “However, we still assess that the banking sector has fulfilled its task of supporting economic growth recovery while ensuring inflation control. The SBV has had timely and effective solutions to overcome difficulties, such as proactively and flexibly regulating credit growth targets, issuing new policies that have an impact on increasing liquidity for the financial market and supporting the real estate market, strengthening supervision and inspection of the operations of credit institutions, promoting restructuring and handling of bad debts, improving governance capacity and applying information technology in banking operations.”

Talking about Vietnam’s economic outlook in 2024, Mr Taylor noted that the recovery in manufacturing, exports, tourism and domestic consumption will play a major role in driving GDP growth to about 6.5%. Stability in the banking sector, along with inflation control measures, will facilitate investment channels such as securities and real estate.

“We expect Vietnam’s GDP growth to rebound from 5.05% in 2023 to about 6.5% in 2024. This is also the growth target just approved by the National Assembly. This growth recovery will be driven by manufacturing, exports, tourism and especially domestic consumption demand. These important drivers will stimulate economic growth not only for the following year but also for many years to come.

Which, the driving force from the manufacturing and export sectors will play a very important role. Currently, we have observed signs that the period when US retailers reduced new imports and mainly sold inventory is coming to an end. This means that Vietnam’s manufacturing and export activities, especially exports to the US, will rebound next year. From there, we also expect Vietnam’s manufacturing output to rebound from only about 1% in 2023 to 8-9% in 2024,” said Mr Taylor.

In this context, Mr Taylor expects that the banking sector will continue to maintain and promote the progress that has been achieved. He emphasised that the support of the banking sector will be very important in promoting the sustainable development of the business community and the Vietnamese economy in the new year of 2024.

“We believe that Vietnam will continue to be an ideal destination for high-quality investment capital. International investors always appreciate Vietnam’s economic, political and social stability, as well as the prospect of increasing income and consumer demand of 100 million Vietnamese people. Vietnam’s attractiveness is further enhanced as multinational corporations implement a China +1 strategy and deploy projects here. In addition, the possibility of upgrading the Vietnamese stock market from a frontier market to an emerging market in the next 2-3 years is also a bright spot.

For the business community, we predict that 2024 will be a time of breakthrough and sustainable development. Businesses have overcome the difficult period and have adapted to the new situation. Support from the banking system will play an important role in this process. We hope that the banking sector will continue to maintain and develop the progress that has been achieved, and will prepare for the challenges and opportunities in the coming year,” emphasised Mr Taylor.

Da Lan