In 1H2023, Vietnam’s economy has experienced the second lowest level of growth in the last 12 years, as evidenced by GDP growth of mere 3.7% as well as the export-import turnover decline by 15.2%. In addition, recent headwinds in the capital market and the credit market demonstrated by increasing corporate bond defaults, coupled with a sluggish residential real estate sector performance are putting significant pressure on the banking sector, as well as other non-bank corporate sectors. As of 30 June 2023, the estimated total value of defaulted bonds accounts for approximately 26.9% value of total non-bank corporate bonds outstanding. On a positive note, there has been a commencement of monetary easing, with a total reduction of 150 basis points in the discount and refinancing rates. We expect that the policy supports in 2H2023 will help alleviate the economic effects of reducing production and exports, even though the recovery of each sector may vary considerably.

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