How does the economy grow when it is injected with large amounts of capital?

Accelerate investment, quickly inject capital into infrastructure and the economy …

On August 19th, across the country, 250 projects and works with a total investment of approximately 1.28 trillion VND were simultaneously inaugurated or commenced construction. Of these, 129 projects used state capital, totaling 478,000 billion VND, accounting for 37% of the total investment; and 121 projects were invested from other sources, totaling 802,000 billion VND, accounting for 63% of the total investment.

According to Mr. Le Anh Tuan, Deputy Minister of Construction , the 250 projects inaugurated or commenced on this occasion will contribute over 18% to the gross domestic product (GDP) this year and over 20% to GDP in the following years.

"Projects and works using state budget funds will create a strategic infrastructure framework, thereby leading to and attracting private investment," Deputy Minister Le Anh Tuan emphasized.

In addition to public investment, there are also projects using private sector investment capital, including foreign direct investment (FDI) projects.

For example, among these hundreds of projects, there are 5 FDI projects with a total investment of 54,000 billion VND. All of this demonstrates the government 's tremendous efforts in mobilizing resources from the entire society for investment, production, and business, especially in the construction of strategic infrastructure projects.

According to calculations by the Ministry of Finance, in order to achieve the growth target of 8.3-8.5% this year, total social investment must increase by 11-12% compared to the previous year; in particular, the mobilization and implementation of total social investment in the last six months of the year must reach approximately 2.8 trillion VND.

According to calculations by the State Bank of Vietnam, to achieve the high growth target, credit will have to increase by 16% this year, injecting approximately 2.5 trillion VND into the economy. Recently, the bank announced a 500,000 billion VND credit package from 21 banks for science, technology, innovation, digital transformation, and strategic infrastructure (transportation, electricity, digital infrastructure, etc.).

Capital is flowing strongly into transportation infrastructure.

In fact, many banks have already provided loans for science, technology, innovation, digital transformation, and strategic infrastructure projects such as Long Thanh Airport, Nhon Trach 3 and 4 power plants, and the Lao Cai - Vinh Yen power transmission line; as well as BOT projects, power production, and power transmission projects. Most recently, this bank participated in financing a portion of the 500KV power line project...

Mr. Hoang Minh Ngoc, Deputy General Director of Agribank, stated: "Having assets or collateral is only one of the conditions; banks normally lend based on the customer's trust in the bank. For example, with this 500 trillion VND package, businesses only need to prove they meet the eligibility criteria to receive a loan."

Be cautious about the risk of inflation.

To achieve the 8.5% growth target this year while ensuring inflation control, macroeconomic stability, and the major balances of the economy, monetary policy plays a crucial role.

The banking sector must increase the supply of capital to the economy. This also forces regulators to confront the challenge of how to control the flow of capital into priority sectors and how to prevent banks from engaging in a "race" for deposit interest rates when credit demand surges.

Since the beginning of the year, basic deposit interest rates have remained stable, lending rates have even decreased by another 0.4% per year compared to the end of last year, and inflation remains under control.

However, inflationary pressure is rising, so increasing the money supply will only exacerbate this pressure. Not to mention, the exchange rate is also under pressure due to the combined impact of economic factors and market sentiment.

Speaking with a reporter from Tien Phong newspaper, economist Ngo Tri Long affirmed that injecting a large amount of capital into the economy is intended to boost economic development. This capital flow focuses on infrastructure projects that stimulate economic growth and create positive spillover effects.

However, Mr. Long noted that the initial success in controlling inflation in the first six months of the year was the result of effective coordination between monetary, fiscal, trade, and price management policies. Nevertheless, the road ahead remains uncertain, so maintaining the annual CPI target within the 4-4.5% range requires consistent and flexible management, as well as enhanced forecasting capacity and proactive policy response.

Specifically, the State Bank of Vietnam needs to continue maintaining a stable benchmark interest rate, focus credit growth on the target of 16%, and concentrate credit flows on exports and manufacturing – essential sectors for GDP growth – avoiding widespread lending that could cause price surges.

Fiscal policy needs to provide controlled support, especially avoiding large adjustments to taxes and fees to limit cost pressures on end consumers. Public investment funds (36% disbursed as of the end of June) should be directed towards infrastructure and domestic capacity, increasing medium-term supply, and not suddenly creating short-term demand pressure...