Vietnam’s Credit Growth and Economic Outlook

Strong growth in credit but risks still closely controlled

During the regular online meeting of the government in july with the provinces and cities managed by the central government, held on august 7, chaired by Prime Minister Pham Minh Chinh, Ms. Nguyen Thi Hong, governor of the State Bank of Vietnam, said credit in the whole system in the first 7 months of the year increased by around 10% compared to the end of 2024 – of the same period last year.

Concerned by the massive influx of credit in real estate and securities, Governor Nguyen Thi Hong analyzed: “The rate of credit growth in these two sectors is certainly higher than the average, but this is consistent with the desire to remove the obstacles of the real estate market. Once a project is raised, the need for capital for its implementation is certain.”

In the securities sector, despite a high growth rate, this proportion represents only 1.5% of the total outstanding loans, without generating systemic risks.The State Bank has notably claimed to closely monitor security indicators.The short-term equity ratio used for medium and long-term loans remains below the 30% threshold. At the same time, it permanently asks credit institutions to balance their equity according to their deadline, thus guaranteeing the security of the system.

SBV maintains macroeconomic stability in a volatile global context

The governor frankly underlined the pressures and challenges, both external and interior, wich affect the management of monetary policy in 2025.

On the international scene, major financial institutions have repeatedly warned of a weakening of the prospects for global growth.Although global inflation has slowed somewhat, the risk of a rebound remains, especially since American customs policies have quickly evolved. The world economy and trade have greatly slowed, which had a negative impact on exports, one of the main engines of Vietnam’s economic growth.

At the same time, the unpredictable progress of international financial and monetary markets, the increase in dollar interest rates, and American tax policies exert increasing pressure on the management of monetary policy. These factors have not only a psychological impact but also a deep impact on economic foundations.

Although the international situation exerts pressure on the exchange rate, Governor Nguyen Thi Hong said that the level of interest rates of loans continues to drop by approximately 0.4%/year compared to the end of 2024, showing flexible management efforts, supporting the reduction of financial costs for the economy.

Though, the exchange rate undergoes considerable pressure, under the combined effect of economic factors and market psychology. To date, the VND/USD exchange rate has increased by 2.9% compared to the end of 2024. In this context, the governor said that if the pressure continues to intensify sharply, the State Bank will consider not further reducing interest rates in order to avoid affecting the stability of the currency.