Vietnam lawmakers call for further rate cut to prop up growth

By Reuters May 9, 2023 | 12:37 am PT

A Vietnamese flag flies atop the State Bank building, near the Vietcombank and Bank for Investment and Development of Vietnam buildings, in central Hanoi, Vietnam November 23, 2017. Photo by Reuters/Kham

Vietnamese lawmakers on Tuesday urged the central bank to consider cutting policy rates further to support the economy and help the country meet its economic growth target for the year.

Vietnam's growth slowed from 5.92% in late 2022 to 3.32% in the first quarter of 2023, prompting the State Bank of Vietnam (SBV) to cut its benchmark rates twice this year.

The country is targeting GDP expansion of 6.5% this year.

"Besides the positive results, there remain multiple challenges that are putting pressure on macroeconomic management and the ability to fulfill the growth target for 2023," head of parliament's economic committee Vu Hong Thanh said in a government statement.

"It is necessary to keep considering lowering policy rates to support growth when both inflation and exchange rate pressures are no longer as stressful as end-2022," the statement quoted Thanh as saying.

JPMorgan Chase Bank in a report released this week expected another cut in benchmark rates of 50 basis points in the second quarter of this year.

Annual inflation in the Southeast Asian country has been easing since the beginning of the year, with April consumer prices rising 2.81% from a year earlier. The government is targeting average inflation of 4.5% for the year.

Vietnam has been one of the fastest growing developing nations. For 2022, it reported growth of 8.02%, the fastest in decades.