VIETNAM, October 21 –
HÀ NỘI – Việt Nam’s GDP grew 13.7 percent year-on-year in the third quarter of this year and 8.9 percent in the first three quarters, according to a report released Oct. 20 by the World Bank (WB).
The bank’s October report, Vietnam Macro Monitoring, shows that industrial production and retail sales posted another month of high growth rates (13.0 percent and 36.1 percent yoy), reflecting both strong economic activity and the low was due to -base effects.
Both export and import growth weakened in September due to weaker demand in the main export markets. FDI exposure declined in September, impacted by heightened uncertainty about the global economic outlook, while FDI disbursements continued to improve, the report said.
Despite softening energy prices, CPI inflation accelerated to 3.9 percent in September from 2.9 percent in August, mainly due to higher education costs and rents. Core CPI inflation also accelerated to 3.8 percent in September, from 3.1 percent in August. The deterioration in the terms of trade moderated in the third quarter compared to the previous three months.
Lending growth accelerated to 17.2 percent in September from 16.2 percent in August as the State Bank of Vietnam (SBV) raised loan growth limits for some commercial banks.
Amid strong credit demand, the average overnight interbank rate rose from 3.5 percent in August to 5.48 percent in mid-October, the highest level since 2013.
The Vietnamese đồng continued to depreciate against a stronger US dollar in September (1 percent mom and 3.8 percent yoy). To stabilize the local currency, the SBV raised two policy rates and the cap on short-term policy rates on local currency deposits by 100 basis points, the first rate hike since April 2020.
The budget balance in September recorded a deficit of $0.5 billion 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, year-to-date government bond issuance reached just 28.7 percent of annual plan, compared to 67.9 percent in 2021.
Although the economic recovery has remained strong, heightened uncertainties related to the slowing global economy, rising domestic inflation and tightening global financial conditions warrant heightened vigilance and policy flexibility, according to the report.
As the economy has not yet fully recovered and growth in key export markets is expected to slow, continued active fiscal policies 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 percent – the policy rate set by the authorities – policymakers should be ready to consider further tightening of monetary policy to ensure inflation remains anchored.
With the end of forbearance and tightening financial conditions, the financial sector faces heightened risks and timely SBV guidance would help contain the occurrence of such risks at the sector level and potentially affect the real economy. – VNS