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Vietnam corporate optimism tops other Asian nations: Bank report
Vietnamese banks’ willingness to extend loans seems to be returning as a result of the government’s fiscal stimulus package, according to Standard Chartered Plc.
The Vietnamese economy expanded 6.2 percent last year, the slowest pace since 1999. The government is targeting 6.5 percent growth this year, while other forecasts include the International Monetary Fund’s 5 percent, Standard Chartered’s 4.2 percent, and CLSA Asia-Pacific Markets’ 3.5 percent.
Domestic and foreign companies in Vietnam do expect slower growth in 2009 than 2008, Tai Hui, the Singapore-based head of Southeast Asian research at Standard Chartered, wrote in a note after a trip to Hanoi and Ho Chi Minh City. Still, measures taken by the government are regarded locally as effective ways to stabilize the economy, he wrote.
“Confidence in the government’s ability to support economic growth is strong relative to other Asian economies,” Hui wrote in a note dated Thursday. In a telephone interview Friday, Hui cited Thailand as an example of another regional country where such confidence is lacking.
In Vietnam, “government fiscal stimulus measures have been generally well-received and have improved sentiment,” Hui wrote.
Vietnam’s Ministry of Planning and Investment said in December that the government was preparing a stimulus package valued at about US$6 billion to help bolster the economy.
Loans, tax collection
Banks’ willingness to extend loans “seems to be returning as a result of the fiscal stimulus package,” Hui said in the note. A decision to postpone new measures on income-tax collection as well an expectation of further infrastructure spending have also boosted sentiment, he wrote.
“The level of confidence that people have in measures taken by the authorities is crucial,” Hui said in the telephone interview. “In the US, for example, announcements of fiscal stimulus packages have not helped much because people are so skeptical about their effectiveness.”
An improving balance of payments picture in Vietnam has also eased market concerns about economic stress from external obligations, Hui wrote.
Preliminary figures released by the General Statistics Office in Hanoi showed the country’s trade deficit narrowed 88 percent in January, while a posting Thursday on the website of State Bank of Vietnam said the country recorded a trade surplus for the month.
“Trade balance improvement is likely to continue, countering weaker capital inflows in 2009,” Hui wrote. “Nonetheless, we continue to expect a further weakening of exports, prompting modest weakness in the Vietnamese dong and a further reduction in borrowing costs.”
The dong is currently trading at about 17,482 per dollar, little changed from the beginning of the year. The central bank has cut its key interest rate to 7 percent from 14 percent since October.
Bloomberg, Thanh Nien
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