Credit increases rapidly
In the context of Vietnam's goal of GDP increasing by at least 8% in 2025 and aiming for double-digit growth in the period of 2026 - 2030, credit continues to be expected to be a key driving force for growth. As of June 18, 2025, outstanding credit of the whole system reached VND 16.73 trillion, up 7.14% compared to the end of 2024 and up 18.71% over the same period in 2024.
Speaking with Lao Dong, Associate Professor, Dr. Pham Manh Hung - Deputy Director of the Institute of Banking Science Research, Banking Academy - said that credit in the whole system will start to increase strongly from February 2025, supported by the GDP growth target of 8% and loose monetary policy. However, Mr. Hung commented that most of the capital flow is still focused on real estate, trade, and public investment projects, instead of spreading to the manufacturing industry.
According to Associate Professor, Dr. Hung, businesses are facing many difficulties such as increased input costs, narrowed export markets, reduced orders, and large inventories, partly due to the impact of the trade war. This makes businesses cautious about expanding production and business, leading to a decrease in demand for loans to invest in production.
Regarding consumer demand, Mr. Hung said that people's income is affected by economic difficulties, local unemployment, and reduced working hours, causing them to tighten spending and limit consumer loans.
Mr. Hung especially noted that part of the credit growth may come from banks restructuring debts for businesses or lending to mature old loans in difficult circumstances, not new capital for expanding production and business activities. Therefore, credit growth is not currently consistent with the capital absorption capacity of the economy.
Dr. Chau Dinh Linh - Lecturer at Ho Chi Minh City Banking University - said that credit growth in 2024 will reach 15.08% while GDP will only be 7.09%, meaning that each 1% of GDP needs up to 2% of credit. Dr. Linh commented that outstanding credit at the end of 2024 will reach 134% of GDP, a very high level compared to international standards, posing a potential risk to the economy. He agreed that credit is concentrated in some sectors such as trade and real estate, while production and technology are not prioritized, posing a potential risk to financial stability.
Associate Professor, Dr. Pham Manh Hung added: Credit growth exceeding real GDP shows great dependence on credit, but capital efficiency is not high. The ICOR coefficient is about 6.5, meaning it takes more than 6 VND of capital to create 1 VND of GDP, much higher than in advanced countries".
Solutions to improve credit quality, towards sustainable growth
For credit to become a real driving force for the GDP growth target of 8% in 2025 and accelerate the 2026 - 2030 period, according to experts, it is necessary to first maintain a flexible monetary policy, stabilize interest rates, and support liquidity for banks. At the same time, it is necessary to closely monitor credit quality, limit outstanding loans, encourage credit in production, high technology, value-added agriculture - industries capable of improving productivity, reducing the ICOR coefficient, thereby improving growth quality.
Dr. Linh commented that the current monetary policy framework pursues multiple goals (growth, inflation, exchange rates, system safety), causing a complex operating stance, reducing the effectiveness of monetary policy tools. Therefore, the State Bank needs to continue to operate flexible interest rates, support liquidity through many channels such as open markets, inter-bank; allocate transparent credit limits from the beginning of the year; operate flexible central exchange rates according to foreign exchange developments; at the same time, promote risk monitoring, implement Basel II and III standards.
In the medium and long term, Dr. Linh said that it is necessary to develop the capital market to reduce dependence on bank credit. Completing the legal framework for corporate bonds and developing the government bond market as standard assets will provide sustainable medium and long-term capital. Along with that, upgrading the stock market by increasing transparency, diversifying goods, developing investment products and organizing investors will help effectively mobilize social capital flows, supporting businesses to innovate and expand production.
Experts emphasized the need to strengthen the coordination of monetary and fiscal policies, in which fiscal policies should focus on investing in high-quality infrastructure, while monetary policies maintain system stability and control inflation. When the market is developing in parallel with a flexible monetary policy, credit will become a real driving force for high and sustainable growth.
