Trillions of dong in new credit have flooded Vietnam’s economy in the past year, but experts warn the bulk is being channelled into real estate and construction — not production — raising concerns over asset inflation and future financial stability, Tuoi Tre has reported→view source.
Key details:
- Credit growth surged in the past six months, but industrial and production lending remains stagnant, according to WiGroup CEO Tran Ngoc Bau.
- Real estate and construction are now the main drivers of credit expansion, with consumer and business lending still constrained.
- FDI and public investment have led GDP growth, but household and private sector activity remains weak, contributing to a disconnect between macro growth and household income.
- Real estate firms are shifting away from bond financing — previously 60 percent of their debt — and increasingly turning to bank loans, compounding credit concentration risks.
- VCBF’s Nguyen Hoang Linh notes asset inflation is accelerating, particularly in housing prices and rents, even as CPI inflation stays subdued.
- Skyrocketing property prices are pushing up living costs and pricing many Vietnamese out of the housing market, despite real demand.
Vietnam’s current credit path suggests a misallocation of capital, with real estate overheating while production lags.
This imbalance threatens to inflate asset bubbles, strain household finances, and increase long-term risk in the banking system.
See also: It’s Time to Talk About Vietnam’s Credit Growth Policy…