Vietnam’s renewed leadership continuity is expected to lend momentum to policy execution and economic reform, even as the country’s ambitious growth targets heighten financial and external vulnerabilities, according to a recent assessment by Fitch Ratings.

The confirmation of Communist Party general secretary To Lam for a second term through to 2030 has reduced political uncertainty following several years of leadership reshuffles. A more settled political backdrop should help the authorities push ahead with priorities such as boosting productivity, supporting technology and innovation, promoting greener growth and sustaining high levels of infrastructure investment.

These objectives sit alongside an exceptionally demanding economic ambition. Officials are targeting a sharp rise in income levels, with GDP per capita expected to climb to about $8,500 by the end of the decade, from roughly $5,000 in 2025. Achieving this would require real economic growth averaging at least 10% a year, a pace that would depend on continued heavy investment, robust inflows of foreign direct investment into higher value-added manufacturing, and meaningful productivity gains driven by structural reform. It would also leave Vietnam highly exposed to global trade conditions and demand cycles.

That exposure is becoming more evident. Vietnam’s strong export performance has generated a sizeable trade surplus with the US, reflecting its growing role as a manufacturing base for multinational companies. However, the widening imbalance risks attracting closer scrutiny from Washington, particularly under a more protectionist trade stance. Tariff pressures are already building, with higher effective US duties expected to weigh increasingly on export growth, even though shipments have so far proved resilient, supported by solid US demand and exemptions for some electronics products.

Vietnam also faces intensified enforcement risks as supply chains between the US and China become more fragmented. Goods deemed to be transhipped through Vietnam or containing a high proportion of Chinese inputs could be subject to punitive tariffs, underlining the delicate position of an economy deeply integrated with both markets.

Domestically, Fitch highlights the limits of Vietnam’s macroeconomic framework. While it has delivered rapid growth, it remains heavily reliant on credit expansion and operates with relatively limited transparency. Credit growth accelerated sharply last year, pushing lending to the economy to about 145% of GDP by the end of 2025, far above the median for similarly rated sovereigns. Such rapid expansion can support activity in the short term but risks fuelling misallocation of capital, asset price inflation and, ultimately, financial instability.

The central bank has set a lower credit growth target for 2026, but there is a risk this could be relaxed if growth falters, repeating the pattern seen last year. Fiscal policy could also be called upon. Although government debt remains moderate by international standards, it is expected to edge higher as infrastructure spending increases. Fitch has previously warned that a significant and sustained rise in public debt could weigh on Vietnam’s credit profile, even as near-term growth remains strong.