Financial market decisive factor for economic growth: Expert
Financial market decisive factor for economic growth: Expert
The size of Vietnam’s financial market was equal to 323% of the country’s gross domestic product last year, so any problems in the financial market will heavily affect the country’s economic growth, stated Can Van Luc, chief economist at the Bank for Investment and Development of Vietnam.
At the Investment and Business Development Forum 2020, held in HCMC today, January 6, Luc said an economy always has three main pillars: labor, goods and finance markets, Phap Luat newspaper reported.
In Vietnam, the financial market has played an important role in the economy.
Last year, VND250 trillion was mobilized from the corporate bond market, up 7% versus 2018. Nevertheless, enterprises should be offered more favorable conditions to ensure the financial market is balanced as they remain reliant on banks.
Meanwhile, VND314 trillion was raised on the stock market, marking a 13% increase year-on-year.
Credit expanded 13.7%, which was considered quite positive.
As for credit quality, the bad debt ratio at credit institutions fell to 1.89%. If the bad debts at Vietnam Asset Management Company were included, the ratio would be 4.6%. Therefore, the plan to reduce the ratio to 3% this year is feasible.
Luc also pointed out four major challenges for Vietnam’s economy this year. Accordingly, the policies and database of enterprises have failed to keep pace with the development of the digital economy.
In addition, international market volatility will continue this year, affecting the prices of gold, fuels and exchange rates.
Charter capital hikes for banks and public debt payments as well as cybersecurity will also be major challenges facing the local economy this year.
Last year, the number of cyber attacks surged 104% over 2018, while only 25% of enterprises pointed out that they were aware of cyber risks but had no solutions to prevent and handle them, Luc added.
Duong Thi Thanh Binh, deputy head of the Monetary Policy Department at the State Bank of Vietnam, noted that the central bank had built targets for the financial sector this year based on multiple factors. Accordingly, the central bank is targeting a 13% growth rate for all modes of payment and credit growth of 14%, but these targets will be adjusted to match existing circumstances.
