The State Bank of Vietnam must step up efforts in the management of the country's banking sector and prepare for all possible scenarios for timely and effective interventions, according to the World Bank.
Carolyn Turk, WB country director in Vietnam, said the global economy will likely enter a period of turbulence while it's struggling with slow growth, decreased demand, high inflation and central banks around the world tightening credit.
|Outside of the State Bank of Vietnam in downtown Hanoi__Photo: VNA|
Turk's comment was made in the aftermath of an event in which three US banks: Silicon Valley Bank (US' 16th largest bank), Silvergate Bank and Signature Bank, one after another, collapsed in a week. She said the ramifications of such an event will likely follow within a short time and consequences be felt across the global financial market, which commands policymakers to pay attention and plan for necessary interventions.
She said there are many similarities that can be observed between the above-mentioned US banks and the Vietnamese banking system, especially in smaller banks.
It highlighted the importance of a strong grip on the financial sector to ensure the central Government stays up-to-date with current developments and relevant data, and is able to respond in a timely manner, Turk added.
Vietnam's economic growth is projected to ease to 6.3 percent in 2023 from a robust 8 percent last year, as services growth moderates and higher prices and interest rates weigh on households and investors, according to the World Bank's report released on March 13.
Service has become the largest sector of Vietnam's economy, increasing from 40.7 percent of GDP in 2010 to 44.6 percent in 2019. The employment share of the sector also rose from 29.6 percent in 2010 to 35.3 percent in 2019. As the largest source of employment, it has absorbed a significant portion of the workforce from the agriculture sector.
However, labor productivity and efficiency in Vietnam’s service sector remain low compared to other countries, reaching USUSD 5,000 per worker in 2019 in comparison to USD 20,900 in Malaysia, USD 9,300 in the Philippines and USD 7,300 in Indonesia.- (VNS/VLLF)