The State Bank of Vietnam’s Deputy Governor Dao Minh Tu has told a press conference that credit growth for 2024 is expected to come in at about 15.08 percent. This is slightly higher than the target of 15 percent set at the beginning of the year. A new credit growth limit for 2025 has been set at 16 percent.
Of note, Thanh Tra has highlighted that the Deputy Governor has said that, inflation permitting (the target for inflation is between 4-4.5 percent), the bank would be willing to allow credit growth to go beyond 16 percent.
This is interesting in that credit growth limits were first introduced just over a decade ago to try to keep bank lending and by extension inflation under control, essentially acknowledging that the more money people have to spend the higher inflation will climb. This reality hasn’t changed, however, the connection between inflation and credit growth in Vietnam has, with the former going down this year while the latter has risen.
That is to say, this seems to be abnormal economic behaviour which may indicate that something is amiss in the State Bank’s thinking.
See also: It’s Time to Talk About Vietnam’s Credit Growth Policy…