- Vietnam remains among the world's fastest-growing economies, supported by the global AI-driven technology cycle and strong public and private investment.
- Given rapid growth, the near-term policy mix needs to be carefully calibrated and external and financial buffers should be strengthened to maintain macro-financial stability.
- Additional structural reforms, a well-calibrated rollout of public investment, and further expansion of social safety nets would support more sustainable and balanced growth over time through productivity gains and higher household consumption.
Hanoi: An International Monetary Fund (IMF) team, led by Mr. Martin Sommer, held discussions for the 2026 Article IV consultation in Hanoi and Ho Chi Minh City from November 3 to 13, 2026. At the conclusion of the mission, the mission chief issued the following statement:
"Vietnam's real GDP grew 9.0 percent year-on-year in the first three quarters of 2026, supported by the global AI-driven technology cycle and strong public and private investment. Inflation eased to 5.1 percent in October, and its January-October average remained slightly above the authorities' 4.5 percent annual target. The current account balance moved into deficit amid higher oil and semiconductor prices, although the exchange rate and foreign exchange reserves have remained broadly stable, supported by robust foreign direct investment inflows and higher interest rates. Bank funding pressures amid rapid credit growth have put upward pressures on interest rates, prompting the State Bank of Vietnam (SBV) to provide liquidity support through multiple instruments.
"Growth is projected at 9.2 percent in 2026 and 8.9 percent in 2027, with activity exceeding its estimated potential level. Inflation is forecast to remain above the authorities' target in both years. Risks are tilted toward weaker growth and higher inflation, including from prolonged tensions in the Middle East, a potential reassessment of AI prospects, trade policy uncertainty, public investment outpacing absorptive capacity, rapid credit growth, and extreme weather events.
"A broadly neutral fiscal stance in 2027 would support macro-financial stability. A well-calibrated rollout of the planned public investment and the prioritization of high-return projects would reduce overheating risks, while ensuring investment efficiency. Fiscal policy will need to be nimble in the period ahead and spending should be scaled back if overheating risks materialize. With global oil prices easing, the broad energy price support should be phased out as planned, with targeted transfers protecting vulnerable groups. Stronger public investment management, greater transparency, and close oversight of risks from public-private partnerships and state-owned enterprises would help safeguard public finances.
"Monetary policy should prioritize price stability. The SBV should continue to aim for year-end credit growth of around 15 percent. Monetary policy tightening would be warranted if underlying inflation intensifies. Modernizing the policy framework, reducing reliance on administrative measures, allowing greater exchange rate flexibility, and gradually bolstering foreign exchange reserves over time would help strengthen resilience.
"It is important to press ahead with plans to strengthen banks' capital and liquidity buffers. Faster transition toward the recently introduced Basel III standards should be encouraged. Lending should be aligned with banks' capital and stable funding capacity, and further regulatory easing should be avoided. Careful monitoring and management of asset quality, sectoral exposures, and concentration risks would be helpful. Over time, transition to a modern macroprudential framework for managing risks would help support financial stability.
"Recent institutional restructuring, administrative streamlining, and social insurance reforms provide a foundation for further progress. Priorities include raising productivity by further improving the business environment, reducing skill mismatches, leveling the playing field among businesses, and facilitating stronger linkages between domestic and foreign-owned firms. Deeper domestic capital markets and more diversified trade and investment would strengthen resilience, while broader social protection and reduced labor market informality would support household consumption. The authorities' plan to establish a comprehensive multi-tier social security system by 2030 will be helpful in this regard. Further strengthening economic and financial statistics is an urgent priority for effective policymaking and risk management."
