Vietnam Economic News: 24 - 31.5.2024
Summary of Vietnam Economic News: 24 - 31.5.2024
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Summary of Vietnam Economic News: 24 - 31.5.2024 ---
VIETNAM GOVT BOND SALES DROP TO $41 MLN AT AUCTION, COUPONS HIT YEAR'S HIGH
Reuters News – 29 May 2024
Vietnam's State Treasury raised 1.05 trillion dong ($41 million) in an auction where it had offered 9 trillion dong of government bonds at the Hanoi Stock Exchange on Wednesday, with coupons hitting fresh highs for this year. The amount is lower than the $201 million raised last week, a bourse filing showed. The uptake was also lower, with only 11.7% of the offer sold, down from 54% in last week's auction
VIETNAM INFLATION RISES IN MAY, NEARS GOVERNMENT LIMIT
Reuters News – 29 May 2024
Vietnam's annual inflation rate edged up to 4.44% in May, official data showed on Wednesday, nearing the government's target ceiling of 4.5% for the year and a potential challenge to efforts to boost credit growth to drive activity. The country, a regional industrial hub, also reported strong growth in exports and industrial output in the month, but rising inflation could be a concern for authorities. Consumer prices had risen 4.4% in April from a year earlier and rose 3.25% in 2023. Vietnam is targeting economic growth of 6.0%-6.5% this year, faster than an expansion of 5.05% last year. The central bank, the State Bank of Vietnam, is aiming for credit growth of 15% to help meet the growth goal, but banks have struggled to increase their lending this year. Banks' total outstanding loans as of May 10 had risen 1.95% from the end of last year, state media cited the central bank as saying on Tuesday. Oxford Economics said on Wednesday it expected exports to continue to grow solidly, but the boost to GDP would likely be limited. "Interest rates in Vietnam's largest importer, the U.S., are likely to stay higher for longer and the overall global external outlook is soft," Oxford Economics said. "We expect 2024 GDP growth to miss the 6.0-6.5% target," it added. Other data released by the General Statistics Office (GSO) on Wednesday showed exports are estimated to have risen 15.8% in May from a year earlier to $32.81 billion, led by shipments of electronics and smartphones Imports in the month are estimated to have grown an annual 29.9% to $33.81 billion, resulting in a trade deficit of $1 billion for May, the GSO said. Shipments of smartphones in May are estimated to have risen 50.6% from a year earlier to $4.4 billion, while electronics exports rose 31.5% to $5.9 billion. Industrial output in the month rose an annual 8.9% and retail sales were up 9.5%, the GSO said. Oxford Economics said it expected the central bank to keep its discount rate unchanged at 3% for the rest of the year but added that "the key risk to the policy rate lies with the Vietnamese dong, which has depreciated against the U.S. dollar by an estimated 4.4% year-to-date".
VIETNAM CENTRAL BANK TO SELL GOLD TO DOMESTIC MARKET THROUGH 4 STATE-OWNED BANKS
Vietnam News – 29 May 2024
Vietnam's central bank will sell gold to the domestic market through four state-owned banks starting on Monday to help narrow the gap between domestic and international prices, the central bank said. The announcement was announced in the Thoi Bao Ngan Hang newspaper, owned by the central bank. The move comes after the it announced at the weekend that it would halt its gold auctions.
FOREIGN INVESTMENT PLEDGES TO VIETNAM DROP 42% IN MAY
Reuters News – 27 May 2024
Foreign investment pledges to Vietnam dropped 42% to $1.8 billion in May from a month earlier, official data released on Monday showed, indicating possibly lower future inflows for the investment-reliant Southeast Asian industrial hub. Investment inflows, which result from past decisions, increased month-on-month in May but new commitments were at their lowest level this year except for February, according to data from the planning and investment ministry as of May 20. So far this year, foreign investors have pledged $11.07 billion to Vietnam, 2% more than in the first five months of 2023. Vietnam received foreign investment inflows of $8.25 billion from Jan. 1 to May 20, up 7.8% from the corresponding period a year earlier.
MITSUBISHI ELECTRIC TO ESTABLISH VIETNAMESE JV FOR FA PRODUCTS
Reuters News – 25 May 2024
Mitsubishi Electric Corporation announced today that it will acquire an 80% stake in Fuji Bakelite Vietnam Co., Ltd. in outskirts of Hanoi, a subsidiary of Fuji Bakelite Co., Ltd. in Okayama Prefecture, Japan. The new joint venture (JV) company, to be named Mitsubishi Electric FP Automation Vietnam Co., Ltd., will be established on June 1 and will begin production of air circuit breakers from January 2025, in addition to the current company's existing line of small low-voltage circuit breakers. Fuji Bakelite Vietnam, which has been in operation since 2014, manufactures small low-voltage circuit breakers for Mitsubishi Electric's Fukuyama Works in Hiroshima Prefecture. The new JV will leverage Fuji Bakelite Vietnam's skilled workforce and expertise in manufacturing and quality control in Vietnam in its manufacturing operations. Up to now, Mitsubishi Electric has expanded its factory automation (FA) business in the ASEAN region by exporting products manufactured mainly in Japan.
CENTRAL BANK DEMANDS LENDING RATE CUTS, GROWTH TARGET TO BE MET
Vietnam News – 31 May 2024
The State Bank of Vietnam (SBV) has demanded credit institutions deliver a system-wide credit growth target of 5-6 per cent by the end of the second quarter this year, and reduce lending rates by 1-2 per cent, it said on Friday. The SBV has outlined several measures to address current issues related to credit and interest rates, including simplified loan procedures, cost-saving measures and stronger applications of IT and digital technology. The central bank aims to cut lending rates by 1-2 per cent, with a focus on supporting economic recovery and growth drivers, emerging sectors, green transitions, circular economy and social housing. It’s also part of an effort to grant easier access to financial solutions and credit, in line with a decision approved by the government and the Prime Minister. The decision requires credit institutions across the country to maintain a stable, reasonably adjusted deposit interest rate that improves capital balance, credit expansion and risk management and promotes stability in the monetary market. The central bank stressed the importance of implementing effective and targeted credit growth solutions to meet the economy’s demand, especially key industries that act as main growth drivers. Credit institutions were told to increase scrutiny in credit control in potentially high-risk businesses to ensure the system’s safety and operation. Projects should be reviewed and studied carefully so that loans can be approved promptly with a flexible approach to collateral policy. The central bank also asked credit institutions to offer additional financial and credit packages to better meet the demands of different customer segments. In addition, the SBV told credit institutions to proactively inform customers about their policies, products and services in a transparent and detailed manner. The central bank demanded credit institutions' active participation in bank-to-businesses programmes, in coordination with local governments and agencies, to support businesses in solving numerous difficulties and challenges they have been facing in recent years.