Vietnam's economic recovery steady but below potential: NFSC

The Vietnamese economy is making steady recovery but the pace is still below potential, according to the National Financial Supervisory Commission (NFSC).

The commission stated that in order to achieve the growth target of 5.8% for the whole year, the Government should introduce measures to boost demand and encourage private investment, in addition to an overall economic restructuring effort.

The commission said low aggregate demand and bad debt were the two factors restraining private investment.

The General Statistics Office (GSO) reported last week that Vietnam’s economic growth quickened in the third quarter, expanding by 6.19% compared with the 5.42% pace in the previous three months.

According to the NFSC, core inflation in September was lower than headline inflation but private spending was slow to improve.

Enterprises were still struggling as output and new orders increased at a slower pace, indicating that production was making improvement but not in a sustainable way, added the NFSC.

GSO data show that there were over 48,000 enterprises forced to dissolve or suspend their operations in the first nine months of 2014, up 13.8% over the same period last year, while the number of new companies dropped 8.7%.

The NFSC was also concerned over the slower-than-expected pace of resolving bad debt by the Vietnam Asset Management Company (VAMC), whose policy did not encourage credit institutions to sell their bad debt to the VAMC.

Central bank governor Nguyen Van Binh said last week that bad debt as of July 2014 was VND162.2 trillion (US$7.6 billion), accounting for 4.11% of total lending and up from the 3.61% reported at the end of 2013.

(Source: nhandan.org.vn)