Vietnam’s central bank announced its commitment to maintaining a flexible monetary policy aimed at controlling inflation, while closely monitoring the economic policies of U.S. President-elect Donald Trump. This approach is intended to allow the country to adjust its domestic policies in response to global economic changes, officials stated on Tuesday.
At a regular press briefing, Deputy Governor Dao Minh Tu of the State Bank of Vietnam (SBV) emphasized the importance of flexibility in the country’s monetary policy to ensure economic stability. With the changing global economic landscape, particularly under the upcoming U.S. administration, Vietnam aims to adapt swiftly to external influences that could impact its economy.
“Vietnam is prepared to adjust its domestic policies based on the evolving economic strategies of major global players, especially the United States,” Tu stated. “Inflation control remains a priority as we navigate through these uncertain times.”
Despite an optimistic economic outlook, challenges persist within Vietnam’s financial and real estate sectors. Tu highlighted that bad debt is on an upward trajectory, presenting a significant concern for the economy. Additionally, Vietnam’s bond and stock markets, along with the property sector, are facing hurdles despite signs of recovery.
“The trend of rising bad debt requires vigilant management to prevent it from derailing the overall economic growth,” Tu noted. He further stressed that while the property market shows signs of rebound, it is crucial to address underlying instabilities.
Vietnam’s manufacturing-led economy expanded impressively by 7.09% last year, reaching $476.3 billion, according to official data released on Monday. This growth outpaced the 5.05% recorded in 2023, driven largely by robust export performance and significant foreign investment inflows.
The central bank attributes this growth to strong demand for Vietnamese goods globally, particularly in key markets like the United States and Europe. Despite this momentum, economists caution that vulnerabilities in banking and real estate sectors remain a concern, with credit growth failing to meet targets.
Tu reassured that non-performing loans are under control and commercial banks are operating stably. Bank lending increased by 15.08% as of December 31, and the SBV is targeting a credit growth rate of 16% for the current year.
In dealing with troubled institutions, the central bank is taking decisive actions. The SBV is currently managing the situation with Saigon Joint Stock Commercial Bank (SCB), which had been at the center of a major financial scandal. The rescue operation, described as unprecedented, involved a significant injection of funds to stabilize the bank.
“The takeover of two weak banks by private lenders will be completed before the Lunar New Year,” Tu confirmed, referring to ongoing efforts to consolidate the banking sector. Additionally, two other banks are set to be absorbed by larger financial institutions as part of these stabilization measures.
Pham Chi Quang, head of the central bank’s monetary policy department, emphasized the need to closely monitor the policies of the incoming Trump administration. With the United States being a top destination for Vietnam’s exports, any changes in U.S. trade policies could have significant repercussions.
Trump has expressed intentions to impose new tariffs on imports, a move that could impact Vietnam’s export-driven economy. Quang highlighted the need for a flexible foreign exchange policy to navigate these potential challenges.
“Our foreign exchange policy will remain adaptable to global factors,” Quang stated. “We aim to stabilize interest rates and the forex rate despite the anticipated difficulties in 2025. It is a challenging task, but we are confident in our ability to control the market.”
The Vietnamese dong is currently trading near its lowest levels against the U.S. dollar, raising concerns about currency stability. However, the central bank remains committed to ensuring a stable exchange rate environment to bolster market confidence.
Quang reassured that the central bank would take necessary measures to stabilize the currency and protect the economy from external shocks. “Our goal is to maintain a stable economic environment that supports growth and resilience,” he concluded.
