Economy 2026: Seeking a Balance Between the '10% Growth Engine' and Inflationary Pressures

Just ten days after its establishment, the Government’s Steering Committee on Macroeconomic Management and Administration convened its first meeting on December 29. At the meeting, Prime Minister Pham Minh Chinh, Head of the Steering Committee, stressed that in pursuing the goal of double-digit growth in 2026, priority must continue to be given to maintaining macroeconomic stability, controlling inflation, promoting growth, safeguarding major economic balances, and ensuring rapid but sustainable development.

The 10% aspiration and the pressure of the price “spiral”

Vietnam enters 2026 on the back of the impressive outcomes recorded in 2025, including GDP growth projected to exceed 8%, a new record in export–import turnover, continued strong inflows of foreign direct investment despite a global slowdown, and inflation kept under control.

Nevertheless, the target of 10% growth in 2026 is widely viewed as a formidable “mountain peak” for macroeconomic management and policy coordination.

Forecasts by the Central Policy and Strategy Commission and the General Statistics Office (Ministry of Finance).

Mr. Jung Hyo Chang, Head of Foreign Exchange and Derivatives Trading at Shinhan Bank Vietnam, observed that a growth target of 10% or higher is extremely ambitious amid continued volatility in the global economy. This is the highest growth target Vietnam has ever set; therefore, it cannot rely solely on existing growth momentum but requires a strong, coordinated, and substantive reform package.

Notably, the expert warned that when growth targets are set at very high levels, the risks of rising inflation and financial imbalances may increase, especially if credit and investment expand sharply. Mr. Jung Hyo Chang cautioned that excessive easing to boost GDP could place pressure on the inflation control target of around 4.5%.

“Finding a balance between rapid growth and macroeconomic stability will be a difficult challenge for policymakers,” he stressed.

How to maintain such a balance was also raised by Associate Professor Dr. Nguyen Huu Huan of the University of Economics Ho Chi Minh City, Vice Chairman of the Executive Authority of the International Financial Center Vietnam in Ho Chi Minh City, when discussing macroeconomic risks that could disrupt expectations of 10% growth.

Mr. Huan analyzed that, in economics, strong growth is sustainable only when three pillars—price stability, fiscal balance, and the adequacy of production factors—are maintained in equilibrium. If any one of these falters, the economy can easily slip into growth below its potential.

The first and most visible risk is the return of inflationary pressure. According to Mr. Huan, in a context of recovering domestic demand and rising global commodity prices, controlling inflation requires very close coordination between monetary and fiscal policies.

“Phillips curve theory and inflation expectation models show that when an economy grows close to its potential, price pressures tend to rise more rapidly—especially in economies where productivity and infrastructure have not kept pace with the expansion of output. China once faced a similar situation during periods of high growth, when inflation exceeded 6% despite tight control of the money supply. For Vietnam, electricity prices, fuel prices, logistics costs, and pressure to adjust public service prices could all become triggers for a new inflationary spiral if not carefully managed,” Mr. Huan noted.

Professor Dr. Tran Tho Dat, former President of the National Economics University, also pointed out that whenever an economy sets a high growth target, monetary policy inevitably faces particular pressures, especially inflation.

He explained that high growth drives strong demand for investment capital, production expansion, and infrastructure development. If monetary policy is overly accommodative, it may encourage excessive borrowing beyond the economy’s capacity to absorb investment, leading to surplus capital, inefficient investment, rising bad debts, and asset bubbles.

According to him, in a context of large-scale public investment, monetary policy cannot be separated from fiscal policy. If fiscal policy expands strongly while monetary policy plays a restraining role, conflicts may arise, with public investment being “crowded out” of credit or facing higher capital costs. Conversely, if monetary policy provides excessive support, it can easily generate inflationary pressures and macroeconomic instability.

Coordinating fiscal and monetary policies in a harmonized manner

In 2026, priority will continue to be given to maintaining macroeconomic stability, controlling inflation, and laying a solid foundation for sustainable growth.

Recognizing these challenges, at the first meeting of the Steering Committee, Prime Minister Pham Minh Chinh called for the conduct of monetary policy to be proactive, flexible, appropriate, and effective, contributing to the maintenance of macroeconomic stability and inflation control. Based on specific conditions, appropriate credit growth ceilings should be set within the competent authority; exchange rates and interest rates should be managed prudently, with capital flows directed toward growth drivers and priority sectors; and the national gold trading platform should be put into operation as soon as possible.

At the same time, he emphasized the continued implementation of an expansionary fiscal policy with clear focus and priorities; the issuance of infrastructure bonds; further research and deployment of tax-related policies; and the full leveraging of fiscal policy to support monetary policy.

This overarching approach to policy management was also clearly reflected in remarks by Mr. Pham Chi Quang, Director General of the Monetary Policy Department, at a press conference held by the State Bank of Vietnam on December 29 to announce banking sector performance in 2025 and key tasks for 2026.

“In the period ahead, the State Bank will make appropriate adjustments, shifting the focus toward macroeconomic stability and inflation control. This has also been a consistent priority in recent times. When policy space and market conditions allow, support for achieving higher growth will continue,” Mr. Quang said.

Earlier, at a meeting of the National Financial and Monetary Policy Advisory Council on December 26, experts assessed that 2026 would remain challenging, with heavy pressure on capital sources and potential risks related to interest rates, bad debts, exchange rates, and private corporate bonds.

Accordingly, the Council recommended that the Government avoid further monetary expansion in the coming year, adopt a more cautious approach to policy management, and ensure well-balanced coordination between monetary and fiscal policies, while focusing on digital transformation, high technology, information technology, digital infrastructure, and innovation.

At the same time, monetary policy management must remain firmly anchored to the goals of maintaining macroeconomic stability, promoting growth, controlling inflation, and safeguarding major economic balances; fiscal policy should be implemented in an effective expansionary manner; public investment disbursement should be accelerated; high-quality foreign direct investment should be attracted; goods supply should be ensured alongside credit support for market development; and solutions to promote exports should be deployed effectively.

Outlook for 2026: Steady hands amid external variables

Despite substantial pressures, forecasts remain cautiously optimistic about Vietnam’s ability to contain inflation.

Mr. Tran Ngoc Bau, CEO of WiGroup, said that in 2026 inflation is forecast to average between 3.5% and 4%, below the Government’s ceiling of 4.5%.

In its 2026 Economic Outlook report, analysts at MBS Securities also project average CPI growth in 2026 at around 3.7%–4% year-on-year.

However, external “headwinds” remain a hard-to-predict variable. Mr. Vu Binh Minh, CFA, Director of Capital and Money Market Business at HSBC Vietnam’s Capital Markets and Securities Services Division, noted that although Vietnam has had a relatively successful year in controlling inflation and stabilizing the macroeconomy, the foreign exchange market and the VND exchange rate are largely influenced by complex and unpredictable international developments. These include the uncertain trajectory of the U.S. Federal Reserve’s monetary policy, U.S. trade and tariff policies, and fluctuations in the global U.S. dollar.

As a result, during certain periods, risks may still arise from external factors, temporarily placing pressure on the domestic foreign exchange supply–demand balance. Nevertheless, the State Bank of Vietnam’s proactive and flexible monetary policy management will continue to create conditions for the market to operate within a stable range.

In this context, businesses—especially import-export enterprises—need to remain proactive in hedging against exchange rate and interest rate risks to ensure that business performance is not adversely affected.

The growth target is ambitious, but with well-coordinated fiscal and monetary “hands,” together with a growth mindset rooted in productivity and innovation, Vietnam can fully find a “golden balance”—accelerating growth while firmly anchoring stability, enabling the economy to move forward in a sustainable and resilient manner.

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