Vietnam needs to cut interest rates further to stimulate borrowing, according to an article in The Investor. Credit growth, at 4.73 percent in June, is well below the 14 to 15 percent target for the year. The article goes on to reference several experts who support a further reduction in interest rates.
Eds note: Credit growth limits were maxed out around October last year. As a result, firms needed to look for other means by which to keep their operations running, for example, selling assets or delaying payments to staff, the tax department, or suppliers. Furthermore, there have already been several interest rate cuts this year but they have only led to marginal increases in business borrowing. This, coupled with a broader economic downturn, has created some pretty dire conditions for local firms and borrowing at this stage, for many firms, may simply see them digging themselves a deeper hole.
See also: Demand needs to be addressed in VN’s economic recovery, too