Vietnam

Vietnam's short-term financing risk is low, but monitoring is needed when it comes to elevated credit growth, the banking sector, foreign exchange reserves and external debt. Real domestic credit growth remains elevated and visibly accelerated since the second half of 2024 (+17% y/y in November 2025) as confidence returned, likely in the context of accommodative policy moves that helped in alleviating a credit crunch in the property sector, where many firms were facing repayment and refinancing difficulties. However, continuously rising credit will raise private sector debt-sustainability risks if the economy slows down. In this context, the central bank has cut its target for credit growth in 2026 in an effort to avoid overheating.

Foreign exchange (FX) reserves peaked in early 2022 and declined quickly through the year, before roughly stabilizing since 2023. The ratio of money supply (M2) to FX reserves increased from 529% at the end of 2021 to more than 940% in September 2025 –  a ratio below 400% is considered adequate –  while the number of months of imports covered by FX reserves decreased from 3.9 to 2.5 during that period, when at least four months is usually deemed appropriate. The heavily managed exchange rate regime has so far prevented large swings of the VND but a significant deterioration of external demand conditions or further fall of FX reserves could undermine this relative stability. Despite being relatively elevated for an emerging country, the external debt level remains decent compared to exports (less than 35% of GDP or around 40% of exports).

Political stability is to be expected in the coming years. Vietnam is a one-party state, tightly controlled by the Communist Party of Vietnam (CPV). After being appointed general secretary of the CPV in August 2024, Tô Lâm was renewed for a five-year mandate in early 2026. In October 2024, Lương Cường was appointed state president, thus reestablishing power-sharing among the top four leaders (CPV general secretary, state president, prime minister and chairman of the National Assembly). However, Lương Cường’s presidency comes to an end in 2026, increasing competition within the party for the position. Tô Lâm becoming state president on top of his current position of CPV general secretary would help to project political stability, albeit risking the creation of an environment more conducive to policy mistakes. In any case, the policy agenda is likely to continue focusing on efforts to attract investment and foster private-sector growth. 

Regarding international relations, Vietnam is likely to continue its traditional “bamboo diplomacy”, with a multidirectional and flexible approach. Vietnam’s addition to BRICS as a Partner Country in 2025 could provide further opportunities to develop partnerships, while the US also remains an important partner for Vietnam. The trade deal reached with the US in July 2025 manages to cap the US tariff increase on Vietnamese exports (to 20%, compared to 4% at the end of 2024), but further talks can be expected in 2026 around precise implementation and enforcement of the agreement.