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Vietnam’s rapid credit expansion poses risks of triggering asset price bubbles, warned prominent academics in the Southeast Asian nation during a recent parliamentary session, according to documents obtained by Reuters.
The Vietnamese government is promoting private lending and increased public spending to achieve an ambitious GDP growth target of 8.3% to 8.5% this year—significantly higher than forecasts from international agencies and private economists. This comes amid challenges such as new tariffs on exports to the United States, Vietnam’s primary foreign market.
During a closed-door parliamentary meeting last week, at least two senior Vietnamese academics criticized the country’s current economic policies—an unusual stance in the tightly controlled, Communist-led government.
Pham The Anh, dean of economics at Vietnam’s National Economics University, explained that Vietnam’s money supply growth is exceptionally high, leading to the highest credit-to-GDP ratio in the region and raising concerns about inflation and asset bubbles. His comments were discussed by the parliament’s economic committee.
Similarly, Vu Sy Cuong, an associate professor at Vietnam’s Academy of Finance, stated that the surge in credits is fueling a rally in the stock market. Both papers were reviewed by Reuters, though officials from the Vietnam Ministry of Finance and the central bank did not comment on the matter.
Anh emphasized the need for a more independent central bank capable of cooling down overheated asset prices, while Cuong did not respond to requests for comment.
Data from the International Monetary Fund shows that loans in Vietnam last year totaled 136.4% of its $476 billion GDP—more than three times the median ratio for emerging and middle-income markets. In the first half of this year, credit growth reached 19.3% annually, surpassing the 16% cap set for all of 2025 and well above the five-year average of nearly 14%, according to Vietnam’s central bank.
The bulk of the credit has gone into real estate development and home purchases, the World Bank noted in its recent report. Anh warned that this credit surge is fueling a “real estate price fever” and creating “ghost cities,” with property speculation exacerbating the situation.
As credit expanded, non-performing loans increased to 5.3% of total loans by February, up from 5% last year—data excluding significant off-balance-sheet lending. Additionally, banks have been reducing their capital buffers for bad debts, nearly halving their reserves over the past three years, according to the World Bank.
Amidst rising stock market rallies and record margin debt—exceeding $11 billion in the second quarter, roughly 5% of the market capitalization—there are growing concerns over financial stability. The government aims to gradually remove credit growth caps starting next year, but experts warn that this could accelerate credit expansion and heighten systemic risks unless other prudential measures are enforced.
While Vietnam’s inflation stood at 3.2% in August, the government has shown no indication of plans to curb credit growth. The stock market has continued to rise since June, driven partly by margin debt. Cuong stressed that long-term economic stability should be prioritized over short-term growth, warning of potential risks if unchecked credit growth persists.