Photo: AFP/NurPhoto/Michael Nguyen
Máté Szakáli
15/05/2025 06:00
At the beginning of 2021, the 13th Congress of the Communist Party of Vietnam set the goal, in a resolution, for the Southeast Asian country to attain developed status by 2045. This was the first time the Party published a long-term and detailed plan outlining its vision for Vietnam’s development.
The resolution sets out the steps needed to achieve this long-term goal, starting with graduating from lower-middle-income country status by the end of 2025, on the 50th anniversary of national reunification. By 2030, when the Communist Party celebrates its centenary, Vietnam aims to become an upper-middle-income country; and finally, by the 100th anniversary of the founding of the Democratic Republic of Vietnam (now the Socialist Republic of Vietnam), it seeks to become a developed, industrialised nation.
The resolution was adopted in the context of a constantly changing international environment, rising anti-globalisation sentiment, and geopolitical tensions — challenges that continue to shape policy planning and growth prospects. Vietnam’s economy is projected to grow by 6.5 per cent in 2025, following strong growth of 7.09 per cent in 2024.
What will 2025 bring?
In 2025, external demand is expected to remain strong in the first half of the year, as some foreign orders are being fulfilled in advance due to US tariff increases. Domestic demand is also expected to improve, while inflation is projected to decline from 3.6 per cent last year to 3.5 per cent, mainly due to falling global energy prices.
Vietnamese authorities are applying a combination of monetary and fiscal measures to support the economic recovery essential to achieving their objectives. The government has extended several stimulus measures into 2025, including a 2.0 per cent VAT reduction and deferrals on tax and land rental payments. Fiscal policy is expected to remain neutral, with the budget deficit possibly narrowing slightly.
On the monetary side, the State Bank of Vietnam has kept policy rates low, reduced interest rates on open market operations, raised credit growth targets, and extended the credit moratorium programme by six months. In addition, state-owned commercial banks have reduced short-term deposit and lending rates to push market interest rates downward.
Outlook and policy recommendations
Achieving sustainable development and long-term economic resilience in Vietnam requires a coordinated and strategic approach. The country’s significant fiscal space allows the government to provide further support measures for vulnerable segments such as small and medium-sized enterprises and low-income households. In the short term, accelerating the implementation of public investment could stimulate growth and strengthen long-term prospects.
Revenue administration should nevertheless be strengthened by improving the implementation and enforcement of tax laws, simplifying the tax system, broadening the tax base, and minimising tax exemptions. Consideration could also be given to amending the State Budget Law to shorten the settlement period of annual government accounts and minimise carry-over spending.
The recent interest rate cuts by the US Federal Reserve have eased pressure on the Vietnamese dong and reduced the risk of speculative capital outflows. Monetary policy should remain accommodative to support a more inclusive economic recovery and a gradual transition towards a market-based interest rate system. Property developers should diversify their funding sources while improving corporate governance. Commercial banks should increase their financial buffers, enhance governance, and strengthen credit and risk management.
Infrastructure development, improving labour productivity, ensuring the financial sustainability and transparency of the social security fund, and strengthening business capabilities will also be key to unlocking the country’s growth potential and confidently achieving the goals set out in the Party’s resolution.
The author is a researcher at the Eurasia Center