Vietnam flags possible rate cut as production growth slows

Vietnam’s central bank governor Friday signalled an interest rate cut may be on the horizon as the government reported industrial production growth slowed in Nov, reflecting restraint that recent policy tightening measures have put on the economy.
State Bank of Vietnam Governor Nguyen Van Binh said central bank will adjust its key policy rate in a timely manner based on market conditions to support companies, adding “consumer price inflation has been easing since August, providing the foundation for a possible rate cut.”

Vietnam has been putting the brakes on its economy in an effort to bring down inflation, which eased to 19.83 percent in November from a recent peak of 23.02 percent in August. The authorities have introduced tightening measures, including several interest- rate hikes, cuts in public investment and curbs on credit growth.

Industrial production rose 5.0 percent on month in November, slowing from a 5.2 percent increase in October, the general Statistical Office said. Output was 8.1 percent higher compared to a year earlier. In the January-November period, it was up 6.9 percent on year.

“Industrial production has grown more slowly this year… given that many companies are facing difficulties in accessing bank loans,” prime minister Nguyen Tan Dung said at a meeting of the National Assembly, the country’s lawmaking body.

“Many projects are left unfinished… while the world demand for goods has shrunk due to complicated situations, including the euro-zone debt crisis,” Dung said.

Binh said the central bank is aiming for overall credit growth of 15 percent-17 percent next year, compared with an expected 12 percent-13 percent this year, and is considering adjusting rules for commercial banks to extend more loans to the manufacturing industry.
Dow Jones

Tags: Vietnam banking industry, Vietnam finance, Vietnam financial, Vietnam interest rates

Posted by VBN on Nov 28 2011. Filed under Banking-Finance. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry