After falling by 12 per cent year on year (YoY) in the first quarter this year, exports continued their double-digit decline, falling 11.7 per cent YoY in April.
HSBC said that the weakness continued to be broad-based, with key shipments like textiles and footwear seeing notable slumps.
Growth headwinds appear through the lens of extremely sluggish credit growth.
Despite an annual credit growth target of 14-15 per cent and two moves by the State Bank of Vietnam to cut its key interest rates in March, loans only grew by around 2 per cent by mid-April, half of the growth of the same period in 2022, reflecting ongoing concerns of economic difficulties, Vietnamese media reports quoted the HSBC report as saying
The authorities, therefore, introduced a series of support policies recently, including a VND 120-trillion credit package for social housing, a 2 percentage point cut of value added tax until 2023 end and plans to restructure some loans.
Despite slowing growth, inflation has been better behaved, offering some relief to policymakers. Headline inflation fell by 0.3 per cent month on month, translating into a benign YoY print of sub-3 per cent, moving further away from the central bank’s 4.5 per cent inflation ceiling.
Vietnam continues to face challenges in the second quarter this year after a tough first quarter economic performance, the HSBC report added.
Fibre2Fashion News Desk (DS)