Vietnam’s Central Bank Projects Credit Growth Could Surpass 16% Target by 2025

Vietnam’s credit growth is on the brink of exceeding its 2025 target of 16%, provided that inflation remains controlled and favorable macroeconomic conditions prevail. This assessment comes from Dao Minh Tu, the Deputy Governor of the State Bank of Vietnam (SBV), who spoke during a recent government meeting.

The SBV has set a credit growth target of 16% for the year, which aligns with the country’s GDP growth target of 8%. Tu articulated this during the government’s January meeting, emphasizing the critical connection between credit growth and overall economic expansion.

In terms of historical performance, Vietnam’s GDP grew by 7% in 2023, corresponding with a credit growth of 14.55%. The following year saw GDP growth of 7.09%, while the credit growth rate climbed to 15.08%. During this time, over VND2,100 trillion (approximately $82.77 billion) was infused into the economy. Tu pointed out that, typically, a 2% increase in credit growth correlates with a 1% rise in GDP, highlighting the integral relationship between these two economic metrics.

Drawing from this correlation, Tu indicated that if Vietnam’s economy were to grow by 10% in the current year, credit growth could potentially soar between 18% to 20%. This optimistic outlook underscores the importance of nurturing both credit expansion and economic growth for sustained development.

To ensure that this ambitious target is met, controlling inflation and maintaining currency stability are paramount. Tu stressed that a conducive macroeconomic environment is critical for achieving these objectives. Therefore, the SBV plans to continue implementing a flexible monetary policy, which will be synergized with fiscal and trade policies to create a holistic approach to economic management.

Regarding interest rates, the central bank intends to manage policy rates in line with general interest rate trends and overarching macroeconomic goals. Moreover, Tu noted that the SBV will encourage commercial banks to lower interest rates by reducing operational costs and leveraging technological advancements. This strategic direction aims to make credit more accessible to businesses and consumers alike, thereby stimulating economic activity.

In addition, Tu highlighted the central bank’s readiness to intervene in the foreign exchange market when necessary. This proactive approach aims to safeguard stable exchange rates and mitigate challenges such as foreign currency hoarding, ensuring that the market remains robust amid fluctuating conditions.