VIETNAM, October 21 –
HÀ NỘI – Việt Nam’s GDP grew by 13.7% year-on-year in the third quarter of this year and by 8.9% in the first three quarters, according to a report published by the World Bank (WB) on 20 october.
The bank’s October report, Vietnam Macro Monitoring, shows that industrial production and retail sales recorded another month of strong growth rates (13.0% and 36.1% yoy), which could be attributed to both the strength of economic activities and weak base effects.
Export and import growth slowed in September due to weaker demand from major export markets. FDI commitment fell in September, affected by heightened uncertainty over the global economic outlook, while FDI outflows continued to improve, the report said.
Despite the decline in energy prices, CPI inflation accelerated from 2.9% in August to 3.9% in September, mainly due to higher tuition fees and rents. Core CPI inflation also accelerated from 3.1% in August to 3.8% in September. The deterioration in the terms of trade eased in the third quarter compared with the previous three months.
Credit growth accelerated from 16.2% in August to 17.2% in September as the State Bank of Vietnam (SBV) raised credit growth limits for some commercial banks.
With strong demand for credit, the average overnight interbank interest rate rose from 3.5% in August to 5.48% in mid-October, the highest rate since 2013.
The Vietnamese đồng continued to depreciate against the strengthening US dollar in September (1% m/m and 3.8% y/y). To stabilize the national currency, the SBV raised two key interest rates and the cap on short-term key rates on local currency-denominated deposits by 100 basis points, the first rate hike since April 2020.
The fiscal balance posted a deficit of $0.5 billion in September for the first time in 2022, but still recorded a surplus of $10.5 billion in the first 9 months of the year. Given the budget surplus, government bond issuance since the start of the year was only 28.7% of the annual plan, compared to 67.9% in 2021.
According to the report, although the economic recovery has remained strong, heightened uncertainties related to a slowing global economy, rising domestic inflation and tighter global financial conditions warrant increased policy vigilance and agility.
Given that the economy has not fully recovered and growth in key export markets is expected to slow, continued active fiscal policy to support the economy should be closely aligned with economic outcomes and coordinated with monetary policy.
At the same time, with CPI and core CPI hitting 4% – the policy rate set by the authorities – monetary authorities should be prepared to consider further monetary policy tightening to ensure that the inflation remains entrenched.
Given the end of forbearance and the tightening of financial conditions, the financial sector faces heightened risks and prompt guidance from the SBV would help stem the materialization of these risks at the sector level, potentially affecting the economy. real. –VNS