Vietnam manages to achieve economic growth of 6.5 percent amid difficulties

Vietnam leaders have managed to achieve economic growth of 6.5 percent amid considerable difficulties.

In 2023, the National Assembly and the Government set an economic growth target of 6.5 percent. However, in the first quarter, GDP growth was only 3.32 percent. Worse, in the first 4 months of the year, up to 77,000 enterprises stopped operation while approximately 78,900 enterprises across the country registered for new establishment and returned to operation after a hiatus.

According to many experts, it is crucial to help enterprises overcome their current problems, especially in accessing and mobilizing capital so that the country can achieve expected economic growth. According to the recently announced Provincial Competitiveness Index (PCI) 2022 survey results, businesses said that they are facing problems with hard accessing credit. Specifically, not many of them can borrow money from a 2-percent interest rate support package because they are unable to satisfy the requirements of the package.

Meanwhile, capital mobilization through the bond channel is almost stagnant. In 2022, individual corporate bonds issued decreased by 44.9 percent compared to 2021 reaching VND 337,000 billion while they mobilized over VND 25,000 billion from selling corporate bonds in the first quarter.

In April, the corporate bond market only recorded one bond issue worth VND671 billion, resulting in the month's issue size equivalent to only 2.5 percent compared to March and 2.25 percent compared to the same period in 2022. Not only that, many businesses are facing the pressure of bond maturity.

According to the Vietnamese credit rating agency FiinRatings’ data, it is estimated that VND 220,770 billion of bonds will mature from March to the end of December. Real estate businesses have a bond balance of VND93,200 billion of mature bonds. The total individual bonds worth VND 36,200 billion will reach maturity in the second quarter and it is VND 35,400 billion in the third quarter.

The above data shows that businesses are suffering huge pressure on capital. The Government and the State Bank thus directed to reduce interest rates for the promotion of production and business recently.

In the socio-economic examination report at the 23rd session of the Standing Committee of the National Assembly just took place, the Economic Committee also suggested that the Government should consider lowering the operating interest rate to support growth in the context of inflation pressure while the exchange rate is not as stressful as at the end of 2022.

From now until the end of the year, economists forecasted that the national economy will face many challenges; therefore, the country must struggle to achieve the expected growth targets.

Economic experts emphasized that the Government needs to persistently implement the goal of stabilizing the macro-economy, controlling inflation, and strengthening the adaptive and resilient capacity of the financial and banking system to achieve the set goals in addition to the implementation of synchronous solutions to remove difficulties of financial, currency, corporate bond and real estate markets and reduction of deposit and lending interest rates to ensure balance and harmony between exchange rates and interest rates, between interest rates and inflation and increase the ability to access capital and absorb capital of people and businesses.

Last but not least, the government should have policies to support interest rates for each specific business in each field.

For the revival of the corporate bond market, the government should provide tools, methods and methods for enterprises to issue bonds with conditions and solvency to bondholders following regulations with the aim to strengthen investors’ confidence.

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