Vietnam’s Prime Minister Pham Minh Chinh has doubled down on his calls for a “more flexible” monetary policy to support businesses as the government worries it may miss this year’s economic growth target.
(Bloomberg) — Vietnam’s Prime Minister Pham Minh Chinh has doubled down on his calls for a “more flexible” monetary policy to support businesses as the government worries it may miss this year’s economic growth target.
The PM reiterated his calls Friday for the State Bank of Vietnam, the second time this week he asked the central bank to loosen policy settings to help ramp up economic activity. The premier sought policies that would boost money supply, encourage credit, reduce borrowing costs, according to a post on the government website.
Chinh’s remarks come as the investment and planning minister said Tuesday that Vietnam may miss its 6.5% gross domestic product growth target this year, with expansion likely coming in at 6% amid challenges. Overseas shipments slumped in 7 of the past eight months, leading to below 5% GDP growth in the first two quarters for the trade-reliant nation that typically expanded above 5% before the pandemic.
The government’s language has shifted from direct calls for cuts in policy rates – which in the past months led to quick action by the State Bank – to asking for a “more flexible, loosening” policies.
The premier also asked the regulator to consider credit packages to stimulate consumer demand, according to a post on the government’s website on Friday. Vietnam, like most trade-dependent economies, faces declining overseas orders.
Economists at Standard Chartered Plc and HSBC Holdings Plc forecast the State Bank will further cut the refinancing rate by 50 basis points in the third quarter to 4.0%. The central bank has delivered four rounds of interest rate cuts this year, with the last rate move bringing down its refinancing rate to 4.5% and discount rate to 3%.
–With assistance from Mai Ngoc Chau and Ditas Lopez.
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