IMF flags inflation and financial risks as Vietnam growth stays strong

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IMF flags Vietnam inflation risks

Highlights

IMF projects Vietnam's real GDP growth at 9.2 percent for 2026 and 8.9 percent for 2027, with inflation above the 4.5 percent target.
Rapid credit growth pressures bank funding and interest rates, prompting the IMF to urge strengthened capital and liquidity buffers without further regulatory easing.
IMF recommends phasing out broad energy price support, prioritizing high-return public projects, and establishing a multi-tier social security system by 2030 to support balanced growth.

IMF mission outlines policy priorities

As reported by the International Monetary Fund, its staff team completed the 2026 Article IV consultation mission to Vietnam after meetings in Hanoi and Ho Chi Minh City from November 3 to 13. The mission is led by Martin Sommer, and its end-of-mission statement says real GDP grows 9.0 percent year-on-year in the first three quarters of 2026 while inflation eases to 5.1 percent in October, with the January to October average still slightly above the authorities’ 4.5 percent target.

The IMF projects growth at 9.2 percent in 2026 and 8.9 percent in 2027, with activity exceeding its estimated potential level. It says inflation is set to remain above target in both years, while the current account moves into deficit because of higher oil and semiconductor prices, even as the exchange rate and foreign exchange reserves remain broadly stable.

The fund says a broadly neutral fiscal stance in 2027 would better support macro-financial stability. It also calls for a carefully calibrated rollout of planned public investment, prioritization of high-return projects, and a phaseout of broad energy price support as oil prices ease, with targeted transfers used to protect vulnerable groups.

Banking and structural reforms remain in focus

The IMF says monetary policy should prioritize price stability and that the State Bank of Vietnam should continue to target year-end credit growth of around 15 percent. It adds that tighter monetary policy would be warranted if underlying inflation intensifies, while greater exchange rate flexibility and a gradual buildup in foreign exchange reserves would strengthen resilience.

On the financial sector, the fund warns that rapid credit growth is putting pressure on bank funding and interest rates, requiring liquidity support from the central bank through multiple instruments. It says Vietnam should strengthen banks’ capital and liquidity buffers, speed up the transition toward Basel III standards and avoid further regulatory easing.

The statement also points to longer-term reforms, including improvements to the business environment, reduced skill mismatches, deeper domestic capital markets and broader social protection. The IMF says the authorities’ plan to establish a comprehensive multi-tier social security system by 2030 would help support more balanced growth through stronger household consumption.

Earlier, we discussed Mexico FCL access after the IMF approved a reduction as the economy strengthened in 2026.

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