The headquarters of the State Bank of Vietnam in downtown Hanoi. (Photo: SBV)

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.

Turk's comment was made in the aftermath of an event in which three US banks: Silicon Valley Bank (the US's 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% in 2023 from a robust 8% 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% of GDP in 2010 to 44.6% in 2019. The employment share of the sector also rose from 29.6% in 2010 to 35.3% in 2019. As the largest source of employment, it has absorbed a significant portion of the workforce from the agriculture sector.

However, labour productivity and efficiency in Vietnam’s service sector remain low compared to other countries, reaching 5,000 USD per worker in 2019 in comparison to 20,900 USD in Malaysia, 9,300 USD in the Philippines and 7,300 USD in Indonesia./.