The International Monetary Fund ( IMF ) has lauded Vietnam’s efforts to strengthen private sector development and scale up public investment, calling them a major step forward.

“The government’s plans for an ambitious reform agenda are very welcome and could boost medium-term growth, but implementation will be key,” the IMF says in a statement after completing its 2025 Article IV mission to the Southeast Asian nation on June 11-24.

The mission was led by IMF executive Paulo Medas. An Article IV mission involves consultation with the authorities of a member country on fiscal, monetary, exchange rate, and other financial issues.

“The government’s focus on institutional reforms to enhance efficiency, strengthen private sector development, and plans to scale up public investment is a major step forward,” says Medas.

Vietnam’s economy rebounded strongly in 2024, with the GDP expanding at 7.1%, backed by robust exports, resilient foreign direct investment, and supportive policies, according to the IMF statement.

This momentum continued into the first quarter of 2025, with economic activity expanding by 6.9%. Inflation remained contained. The current account surplus reached a record 6.65% of GDP in 2024.

The outlook is “heavily dependent on the outcome of trade negotiations” and is constrained by elevated global uncertainty on trade policies and economic growth.

“Our projections, in line with the IMF April 2025 World Economic Outlook, assumes high tariffs take effect in the third quarter. In such a scenario, economic growth is projected to slow to 5.4% in 2025 and decelerate further in 2026.  However, if global trade tensions subside, the economic outlook would improve significantly,” Medas says.

“Downside risks are high. A further escalation in global trade tensions or a tightening of global financial conditions could weaken further exports and investment.”

In Vietnam, financial stress could re-emerge from tighter financial conditions and high corporate indebtedness. “On the upside, achieving nondiscriminatory trade agreements and successfully implementing planned infrastructure and structural reforms could significantly boost medium-term growth,” says Medas.

Given the uncertain outlook, the IMF team says Vietnam should focus on preserving macro-financial stability while navigating economic adjustments. Fiscal policy, supported by low levels of public debt, should take the lead in cushioning the near-term impact, especially under downside scenarios.

Accelerated implementation of public investment and strengthening of social safety nets are important.

“Monetary policy has much more limited room and should be decisively focused on anchoring inflation expectations. Allowing the exchange rate flexibility will be critical as the economy adjusts to the external shock,” he says.

“Some monetary easing could be considered if global interest rates decline as expected and inflation falls. Vigilance is needed to monitor and act against inflation pressures arising, including due to external shocks.

“These challenges underscore the importance of modernizing the monetary policy framework to enhance its effectiveness and anchor stability, including by replacing credit growth limits with an improved prudential framework.”

Medas, division chief at the IMF’s Asia and Pacific department, also calls for further efforts to strengthen the soundness of the financial sector. To bolster banking system resilience, priorities include strengthening bank supervision, building liquidity and capital buffers, and further improving the bank resolution framework.

It will be important for Vietnam as a regional hub to develop and implement concrete reforms to improve key infrastructure, like the logistics and energy sectors, as well as the functioning of capital markets, education and training, and productivity. 

To maximize the return on large investments, it is critical to strengthen public investment management and adopt a sound macro-fiscal strategy to preserve the health of public finances. Efforts to strengthen economic governance are essential, including strengthening the anti-money laundering/counter-terrorism financing regime.

Medas also notes that the country’s rapid economic growth is outpacing the development of its economic statistics, and as such, urgent efforts are needed to close data gaps to support effective policymaking and risk management.

The IMF team held discussions with Deputy Prime Minister Ho Duc Phoc and  senior officials of the State Bank of Vietnam, the Ministry of Finance, the National Assembly, and other government agencies. They also met with representatives from the private sector, think tanks, and other stakeholders.