Monetary policy is a key factor for economic stability and growth

	Monetary policy forecast unlikely to loosen further
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Economic growth is boosted by business and investment activities. Illustrative photo: H.Dieu

Inflationary pressures may increase

Standard Chartered's report also forecasts Vietnam's economic growth at 7.5% in the first half of the year and at 6.1% in the second half of the year compared to the same period last year.

The growth stemmed from the increased business activities and sustainable foreign investment.

GDP của Việt Nam trong năm 2024 đã đạt mốc 7,09%, tăng trưởng khá so với mục tiêu 6,5% của Chính phủ.

Vietnam's GDP in 2024 has reached 7.09%, growing compared to the Government's target of 6.5%.

However, Standard Chartered's report said that recent data shows a slowdown, especially in the real estate sector, which still face difficulties despite signs of recovery.

Standard Chartered experts believe that inflationary pressures may increase in 2025 due to rising prices in the healthcare, housing, construction materials, and food sectors.

The State Bank of Vietnam (SBV) is likely to face challenges if inflation increases in the second quarter of 2025, which may cause difficult for economic recovery efforts.

Standard Chartered economists said that the CPI and inflation will continue to increase annually in the coming years.

It needs to increase foreign exchange reserves to avoid excessive VND appreciation.

On the other hand, other important macroeconomic indicators in January showed adjustments in domestic and foreign data. However, electronics exports continued to improve.

Vietnam maintains a large trade surplus with the US market, but in the new context, it may face closer supervision.

The Vietnamese Dong (VND) is still strictly controlled, helping to limit short-term exchange rate fluctuations.

Despite a fiscal deficit that has averaged around 2% of GDP over the past two decades, Vietnam’s economy has maintained a sustainable growth momentum.

Standard Chartered economists believe that the SBV should increase foreign exchange reserves to avoid excessive VND appreciation.

Tourism is expected to be a key growth driver, supported by rising international arrivals and the return of Chinese tourists.

Meanwhile, credit growth is forecast at 16% in 2025, with loans rising 15.1% in 2024, although lending remains cautious.

Lower interest rates in the US may help limit capital outflows from Vietnam, but low imports from Vietnam remain a challenge.

Additionally, commodity prices, especially oil remain a concern.

Monetary policy is key to economic stability and growth.

Mr. Tim Leelahaphan, Senior Economist for Vietnam and Thailand, Standard Chartered Bank.

Mr. Tim Leelahaphan, Senior Economist for Vietnam and Thailand, Standard Chartered Bank, said that the Government focuses on promoting stronger economic growth, which could help maintain low interest rates in the short term.

“However, we forecast that interest rates will gradually return to normal levels in the second quarter. The SBV expected to increase by another 50 basis points in the second quarter of 2025,” Mr. Tim Leelahaphan said.

Furthermore, the expert said that the inflation, the US Federal Reserve's (Fed) policies and the VND's movements will play an important role, in which the SBV's monetary policy decisions will be key factors to maintain economic stability and growth in 2025.

To ensure sustainable growth, Mr. Tim Leelahaphan said that Vietnam needs to diversify its economy and strengthen its ability to respond to natural disasters.

Prof. Dr. Hoang Van Cuong

From the perspective of domestic experts, Prof. Dr. Hoang Van Cuong, a member of the 15th National Assembly and former Vice President of the National Economics University, said that to achieve double-digit growth, the increase in labor productivity is key factor.

Vietnam's labor productivity is still low, because currently, more than 60% of our labor force is informal, including 40% in rural areas.

To overcome this, Prof. Dr. Hoang Van Cuong said that it is necessary to attract more labor in this area to the formal sector with contracts, working hours, processes, etc. in factories, plants, and companies.

In addition, the growth target is not only quantitative growth, but also qualitative change, from institutional reform, innovation to improving national competitiveness.

The traditional growth drivers currently have a basis to maintain such as public investment resources, abundant public investment space because of low public debt.

Along with that, exports and consumption recovered, especially tourism.