Vietnam’s credit extension is expected to pick up pace over the rest of the year to reach growth of 10 percent from 2013 levels, though still below the government target of 12-14 percent, a local newspaper reported on Tuesday.
The forecast was given by State Bank of Vietnam Deputy Governor Nguyen Thi Hong, who said she hoped actual credit growth would exceed 10 percent, the VnEpress daily said.
Achieving that forecast, however, would require a sharp pickup in the speed of credit growth in the last four months of 2014. The report said loans had risen by 4.5 percent in August from the end of last year.
The central bank wants to boost lending to stimulate an economy propped up by manufacturing and exports, but constrained by bad debt and weak spending. Bankruptcies remain rife and many Vietnamese do not qualify for loans or are turned off by prohibitively high interest rates.
Slower lending could affect Vietnam’s economic growth rate, which has been targeted at 5.8 percent for 2014.
In July the World Bank cut its forecast of Vietnam’s 2014 gross domestic product growth to 5.4 percent from 5.5 percent, citing weak consumption, low confidence in the private sector, high bad debts at banks and debt exceeding equity in state-owned enterprises.
The country’s National Financial Supervisory Committee has projected the annual growth at 5.6 percent to 5.7 percent, below the target.
Besides, a territorial dispute with China could trim 1 percent off this year’s economic growth, according to several Vietnamese economists.