Financial regulator suggests boosting demand to stimulate growth

10:12 | 12/07/2016 Finance - Banking

The National Financial Supervisory Commission (NFSC) has said measures are needed to boost aggregate demand if Vietnam wants to achieve the growth target of 6.7% for the whole year.

Financial regulator suggests boosting demand to stimulate growth

The recommendation was made as official data indicate that Vietnam’s economy grew at a slower-than-expected pace in the first half of 2016, expanding by only 5.52%, compared with 6.28% during the same period last year, due to declines in both agriculture and mining.

Agriculture was down 0.18% as a result of saltwater intrusion, drought and other natural disasters while the mining sector slumped 2.2% due to a 6.1% fall in oil output.

The NFSC, however, states that Vietnam’s growth trend in the long term is still being sustained thanks to institutional reforms and improvements in the business environment which aim to enhance national competitiveness.

But growth in the short term is slowing down due to cyclical factors and a decrease in aggregate supply.

The commission has recommended faster disbursement of capital for development, an annual credit growth rate of 16-18% and expanding export markets.

According to the NFSC, consumer prices have continued to rise since November 2015 with inflation in June standing at 2.4% compared to a year earlier as a result of increases in healthcare and educational costs.

Meanwhile core inflation remains stable at less than 2% since the start of the year.

The commission forecasts that inflation for 2016 will be higher than 2015’s figure but will not exceed 4.5%./.


Source: NDO