Việt Nam’s Economic Growth: Balancing Ambition with Stability
Rising Economic Ambition
Vietnam stands at a crucial juncture as it aims for high economic growth in the coming years. With a recorded GDP growth of 8.03% in 2025 and an inflation rate of just 3.3%, the nation’s economic performance has shown resilience. However, as experts point out, this ambition must be pursued with caution to avoid jeopardizing macroeconomic stability, especially given the looming threats of inflation exacerbated by ongoing credit expansion.
Pressures of Inflation in 2026
Looking ahead to 2026, inflationary pressures are expected to intensify. Nguyễn Đức Độ, PhD, deputy director of the Institute of Economics and Finance, emphasizes this concern, linking it to the delayed effects of credit growth in the previous year. While the credit growth in 2025 was not excessively high compared to the past decade, its impact on inflation cannot be overlooked, particularly as substantial amounts flowed into asset markets.
The Enigma of Growth Targets
With a target GDP growth rate of 10% set for 2026, Vietnam faces a dual challenge: stimulating robust growth while managing inflation. Achieving strong economic growth will likely necessitate significant increases in both investment and consumption, which could, in turn, elevate price levels across various sectors.
Exchange Rates and Global Pressures
The exchange rate is another critical factor that could influence inflation during 2026. A surge in domestic demand might lead to increased imports, while export growth could stall due to a slowdown in the global economy. This scenario puts additional strain on the exchange rate, impacting consumer prices and complicating the economic landscape.
Commodity Prices Under Scrutiny
Global commodity prices present a mixed bag of expectations for 2026. Dr. Độ suggests that while the world economy is poised for sluggish growth, a significant spike in commodity prices is unlikely. However, the potential for further declines in prices is also restricted after a sharp drop in 2025. Keeping an eye on interest rates, which saw modest increases in 2025 due to credit growth outpacing deposit growth, is also essential for managing inflation in the coming year.
The Tightrope of Policy Management
Lê Quốc Phương, PhD, a former deputy director at the Ministry of Industry and Trade, highlights that the determinants supporting price stability in 2026 will mirror those of 2025. However, he cautions against overly expansionary fiscal and monetary policies, particularly those aimed at achieving a GDP growth rate of 10% or higher from 2026 to 2030. Such aggressive policies could trigger substantial inflationary pressure.
Recommendations for Sustainable Growth
To navigate these waters successfully, Phương advocates for a balanced approach. High growth through increased investment must be meticulously controlled. History serves as a cautionary tale; rapid growth coupled with lax policies can lead to soaring inflation, economic sluggishness, an increase in bad debts, and business failures.
The Need for Controlled Fiscal Expansion
Experts suggest that while fiscal policies should expand, such expansion must be implemented in a controlled manner. The monetary policy landscape should remain cautious, with credit growth limits still in place. Any temporary increases, such as raising the credit ceiling to a maximum of 20%, should be accompanied by measures ensuring that loans are directed toward productive activities rather than speculative investments.
Coordinated Policy Approach
Both Dr. Độ and Phương emphasize the necessity for careful coordination between fiscal and monetary policies to manage inflation while pursuing GDP growth. The existing credit-to-GDP ratio is already high, necessitating a focus on maintaining macroeconomic stability while targeting productivity-driven growth.
Future Paths: Innovation as the Key
Looking toward the future, experts agree that sustainable economic growth cannot depend on expanding the money supply or increasing credit indefinitely. Instead, the focus should shift toward enhancing productivity through technological advancements and innovation, laying a stronger foundation for Vietnam’s economic aspirations.