The anchor for curbing inflation by 2026?

The year 2026 is expected to be an acceleration year for Vietnam’s economy, with a GDP growth target of around 10%. However, as monetary policy space narrows, the credit-to-GDP ratio remains high, and the global economy harbors many uncertainties, inflationary pressure becomes a present challenge. The question is not only how much inflation will increase, but more importantly: what are the solid anchors to rein in inflation during a period of high growth?

Pressure Not Spiking but Accumulating Clearly

Overall, inflation in 2026 is forecast to be higher than in 2025, but a scenario of a strong outbreak is unlikely. However, pressures of an accumulative nature are quite evident, mainly stemming from the internal factors of the economy as it enters an “acceleration” year.

One of the important sources of pressure is the lagged effect of credit growth. “Even though credit in 2025 did not overheat compared to the previous period, the capital pumped into the economy usually requires a certain lag to transform into actual consumption and investment demand. It is precisely this lag that often pushes inflationary pressure into the following year,” an analysis noted.

When a portion of credit flows into asset markets like real estate and securities, rising capital costs and rental expenses will spill over into the prices of goods and services. This pressure may not explode immediately but occurs persistently and is difficult to identify in the short term.

Furthermore, the GDP growth target of around 10% requires a very high level of aggregate demand expansion. In the short term, the capacity of aggregate supply remains limited, especially in sectors heavily dependent on imported inputs like energy, construction materials, and production equipment. As public investment is accelerated alongside a strong recovery in domestic consumption, the risk of demand-pull inflation forming is hard to avoid.

The exchange rate is also a variable worth noting in the 2026 inflation picture. Promoting growth through domestic investment and consumption will lead to large import demand, while export prospects still depend heavily on global demand. If the trade balance comes under pressure, the possibility of the VND facing depreciation pressure cannot be ruled out, thereby increasing import costs and having a spillover effect on the domestic price level.

Additionally, 2026 could also be a time for continued adjustments to the prices of goods and services managed by the State according to market-oriented roadmaps, such as electricity, healthcare, and education. While these are necessary steps in the long term, if not carefully calculated in terms of timing and magnitude, these adjustments could still add short-term pressure to the CPI.

On the other hand, the 2026 inflation picture also has “braking” factors. Slow global economic growth makes it difficult for the prices of basic commodities like oil, metals, and food to rise sharply. A more stable global price level will help reduce imported inflation pressure, thereby supporting domestic CPI control. Simultaneously, domestic interest rates are forecast to maintain a slight upward trend due to credit growing faster than deposits, contributing to curbing excessive credit demand.

Considering all factors, many forecasts suggest the CPI in 2026 could increase by an average of around 3.5%, still within the control threshold. However, the biggest challenge is not only the actual inflation figure but also controlling inflation expectations. When expectations are “anchored” at a high level, the price and wage adjustment behavior of businesses and workers can self-amplify inflationary pressure.

Transforming the Growth Model to Alleviate Price Pressures

In this context, monetary policy is seen as the first anchor to rein in inflation in 2026. When the space for monetary easing is no longer ample, continuing to strongly expand credit to achieve high growth in the short term harbors significant risks. Therefore, monetary management in 2026 needs to prioritize macroeconomic stability, controlling money supply and credit growth at reasonable levels. Maintaining credit management tools, including credit growth ceiling mechanisms, will still play an important role in directing capital flows into production and business, limiting flows into speculative, high-risk sectors.

Alongside monetary policy, fiscal policy is the second anchor. With a public debt-to-GDP ratio of about 34%, Vietnam still has some room to use fiscal policy to support growth. However, this room needs to be used selectively and with discipline.