Banks have resumed lending to an 'astonishing' degree, reviving delayed property projects and boosting construction, analysts said.
Figures released by the government show that loans have increased by 15% so far this year. Deputy Prime Minister Nguyen Sinh Hung said it was a sign that the government's loan subsidy programme is working. It was introduced in direct response to a tightening of credit in the second half of 2008.
'A number of credit lines have reopened, resulting in a visible upturn in construction activity. Dust-covered projects, inactive over the past 12 months, are going full-speed ahead, and companies are acting to secure material while commodity prices seem low,' said a statement from the Vietnam Property Fund.
Further signs of a boost come from a research note from Vinacapital Investment Management which says that the construction industry expanded 6.9% in the first quarter from a year earlier, compared with a 3.1% growth rate for the economy as a whole.
Vinacapital said increased lending has helped fuel a gain in Vietnam's key stock index this year that has now reached 30%, and would also support economic growth.
'The resumption of stable credit growth will help ensure that an economic growth rate of 3.5% to 4% for 2009 is achievable,' it said.
The government is targeting economic growth of at least 5% this year, and the International Monetary Fund expects a 3.3% expansion.
Despite the economic slowdown, Vietnam's real-estate market has remained relatively resilient, according to global consultancy firm Jones Lang LaSalle. It says that 3.1% economic growth in this year's first quarter is attainable and it would have been more if the government had reacted sooner with a stimulus package.
