At the 3rd Vietnam Economic Forum in 2025, themed “What Drives GDP Growth of 8.3% – 8.5%,” organized by Lao Dong Newspaper on September 26th, Dr. Can Van Luc, Chief Economist at BIDV, stated that the State Bank of Vietnam’s monetary policy margin is currently very limited, making further interest rate cuts highly challenging. The central bank’s refinancing interest rate stands at approximately 4.5% per year, slightly higher than the U.S. overnight lending rate of 4.25%.
“Lowering interest rates further would be risky due to concerns about foreign exchange outflows. The Governor of the State Bank has also addressed the National Assembly, stating that if exchange rates become volatile, interest rate adjustments will be considered. Therefore, reducing rates is difficult, not to mention the potential strain on money supply and inflation,” Dr. Luc explained.
Dr. Can Van Luc, Chief Economist at BIDV
According to the expert, credit growth is excessively high, making it an unreliable channel for economic stimulus. Credit has already grown by approximately 11%, with a 20% increase compared to the same period last year. Real estate credit has expanded rapidly, making it impossible to rely on bank credit to drive economic growth while managing bad debt risks.
In contrast, fiscal policy still has significant room for maneuver. Focus should be placed on reducing taxes and fees, as well as accelerating public investment disbursement. It is crucial to strategize fiscal policies for the upcoming year, especially as Vietnam is revising numerous laws related to taxes and fees.
Reform efforts should prioritize private sector development, including state-owned enterprises. A more sustainable real estate market, aligned with citizens’ income levels, is essential. Regarding trade policies, Dr. Luc noted that exports and foreign direct investment (FDI) are showing signs of slowing down. Decisive measures are needed to reform business investment activities and strengthen domestic capabilities, such as updating strategies for the textile industry in the current context.
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