Real output: A woman prepares a branch of peach blossoms for sale as decorations ahead of the Lunar New Year celebrations in Hanoi. Economists say for Vietnam to keep inflation within the 4% to 4.5% target, there will be a need for fiscal discipline. — AP
HANOI: Pursuing greater economic growth is a priority, but experts warn that Vietnam must calibrate its policies carefully to avoid trading macroeconomic stability for ambitious growth targets, particularly as inflation risks rise alongside continued credit expansion.
Vietnam posted gross domestic product (GDP) growth of 8.03% in 2025, while keeping inflation at 3.3%.
Looking ahead to 2026, inflationary pressure is expected to increase, largely due to the lagged effects of credit growth, according to Dr Nguyen Duc Do, deputy director of the Institute of Economics and Finance.
He noted that credit growth in 2025 was not unusually high compared with the past decade, so its direct impact on inflation may be limited, especially as a sizeable share flowed into asset markets.
However, the 2026 GDP growth target of 10% placed upward pressure on prices, as such strong expansion would require a sharp rise in both investment and consumption.
The exchange rate is also expected to influence inflation in 2026. Stronger domestic demand could push up imports, while export growth may face headwinds from a slowing global economy, adding pressure on the exchange rate and consumer prices.
Dr Do added that inflationary pressure from global commodity prices is likely to remain modest.
With the world economy forecast to grow slower, commodity prices are unlikely to surge in 2026, although the scope for further declines is limited after the sharp fall recorded in 2025.
Interest rates edged up slightly in 2025 as credit growth outpaced deposit growth, a trend that may continue in 2026 and help restrain inflation.
According to Dr Le Quoc Phuong, former deputy director of the Industry and Trade Ministry ’s Information Centre, the factors underpinning price stability in 2026 will be broadly similar to those in 2025.
However, he cautioned that expansionary fiscal and monetary policies aimed at achieving GDP growth of 10% or more from 2026 to 2030 would generate significant inflationary pressures.
He stressed that pursuing high growth through rapid increases in investment must be tightly controlled.
Past experience showed that high growth combined with loose policy settings can lead to soaring inflation, followed by abrupt tightening, economic slowdown, rising bad debts and business failures.
To achieve high growth while keeping inflation in check, Dr Phuong recommended avoiding simultaneous aggressive easing of both fiscal and monetary policies.
Fiscal policy, he said, should be expanded in a measured manner, while monetary policy should remain prudent.
He argued that credit growth limits should not yet be removed.
Instead, the credit ceiling could be temporarily raised to a maximum of 20%, accompanied by measures to ensure credit flows into productive sectors that generate real output and productivity, rather than into high‑risk areas such as real estate, securities, gold or speculative activities.
Echoing this view, Dr Do said although inflationary pressures in 2026 may remain manageable, caution is still required, as monetary risks could accumulate if high credit growth persists for an extended period.
To achieve high GDP growth while keeping inflation in the 4% to 4.5% target, he highlighted the need for close coordination between fiscal and monetary policy.
With the credit‑to‑GDP ratio already elevated, monetary policy should prioritise macroeconomic stability, including controlling inflation, stabilising interest and exchange rates, containing bad debts and safeguarding the banking system.
Fiscal policy still has room to support growth, but faster disbursement of public investment will be essential.
In the longer term, experts stressed, high growth cannot rely on expanding money supply and credit, it must instead be driven by productivity gains rooted in technology and innovation. — Viet Nam News/ANN
