Vietnam aims for 8.3-8.5% economic growth by 2025.

Recently, the Government of Vietnam has embarked on a crucial adjustment in its fiscal strategy, urging the State Bank of Vietnam (SBV) to proactively modify the credit growth target for 2025. This adjustment aligns with an ambitious GDP expansion target set between 8.3% and 8.5%. As concerns about economic stability and inflation loom, this move reflects a dynamic approach to nurturing economic growth while maintaining macroeconomic balance.

This new GDP growth target has been laid out in a recently issued resolution. It emphasizes the importance of economic growth while ensuring macroeconomic stability, highlighting a commitment to control inflation and maintain vital economic balances. The new target surpasses the National Assembly’s earlier forecast of “at least 8%”, indicating an optimistic outlook on Vietnam’s economic potential.

Recognizing credit management as a pivotal lever for supporting production and business activities, the resolution calls for proactive and flexible use of monetary policy tools from the SBV. A successful coordination between monetary and fiscal policies is deemed essential for stabilizing the economic climate and the foreign exchange markets.

In its resolution, the Government stresses the need for the SBV to publicly and transparently adjust the credit growth target. This includes ensuring that inflation remains under control while striving for the elevated GDP growth rate. This dual focus is crucial for fostering trust and predictability in economic policymaking.

In addition to altering the credit growth target, the resolution lays out specific directives for credit institutions. Banks are encouraged to reduce their operational costs, which will subsequently create the capacity to lower lending interest rates. These measures are intended to bolster businesses and support the livelihoods of individuals, especially in a post-pandemic economy.

Moreover, there is a strong push for banks to extend credit toward emerging sectors such as digital transformation, science and technology, and green economics. These sectors are seen as critical for fostering innovation and sustainability, areas that are increasingly important in today’s global economy.

Also highlighted in the resolution is an efficient fiscal policy managed by the Ministry of Finance. The goal is to cultivate a reasonable and focused approach to fiscal expansion, aiming for a state budget collection increase of at least 25% compared to initial forecasts for 2025. This showcases the government’s commitment to driving public investment for long-term growth.

Anticipated social investment capital in the latter half of the year is around VND 2,800 trillion (approximately $106.77 billion), with bank credit being identified as a key resource. The implications for investment and liquidity management are significant, as banks will have to adapt to these expectations.

In response to the resolution, the SBV is taking proactive steps to stabilize interest rates, a crucial move to stimulate economic growth. Monitoring and reinforcing bank supervision will be essential in this regard, ensuring that the most effective practices are adopted across the banking sector.

Currently, the average deposit interest rates at commercial banks remain stable, typically below 6% annually. The average lending rate stands at 6.23%, having decreased by 0.7 percentage points since the end of 2024. Such figures attest to the responsive measures undertaken by financial institutions in light of evolving economic conditions.

By July 28, total credit across the banking system had seen an uptick of 9.64% compared to the end of 2024, a development that indicates positive trends in credit growth. However, external factors have warranted caution; Standard Chartered recently revised its 2025 GDP growth projection for Vietnam to 6.1%, down from earlier estimations, emphasizing an anticipated economic slowdown in the second half of the year.

On July 24, Standard Chartered noted that the country’s economic expansion could slow to 4.9% year-on-year in the latter half of the year, down from 7.5% in the first half. This assessment aligns with the Asian Development Bank’s revised GDP growth forecasts for Vietnam, projecting 6.3% growth in 2025 and 6% in 2026.