Growth Amid Global Headwinds

Vietnam's GDP growth is forecast at 6.5% to 6.8% for 2026, according to consensus estimates from the World Bank, ADB, and domestic institutions. The projection reflects resilient manufacturing exports, recovering domestic consumption, and sustained FDI inflows, even as global trade policy uncertainty persists.

Macroeconomic Baseline

The General Statistics Office confirmed full-year 2025 GDP growth at 6.7%, slightly above the National Assembly target of 6.5%. The result was driven by a strong second half, during which manufacturing output accelerated and retail sales growth stabilised above 8% year-on-year. For 2026, the government has set a target band of 6.5% to 7%, with the State Bank of Vietnam signalling a neutral-to-accommodative monetary stance in the first half of the year.

Inflation is expected to remain within the 3% to 4% range, barring exogenous shocks to food or energy prices. The CPI averaged 3.2% in 2025, and core inflation — excluding food, energy, and administered prices — has remained stable at approximately 2.8%. This gives the central bank room to maintain policy rates at current levels, with selective easing available if credit growth undershoots targets.

Export Dynamics and External Demand

Vietnam's export growth in 2025 reached 12.4%, driven by electronics, textiles, and machinery. The United States remained the largest export destination, accounting for 29% of total shipments, followed by China at 16% and the European Union at 12%. The EVFTA, now in its sixth year of implementation, continues to support export growth to Europe, with utilisation rates improving as more enterprises obtain certificates of origin.

The primary external risk is trade policy uncertainty in the United States. The incoming administration has signalled a review of tariff arrangements with key trading partners, and Vietnam's large bilateral trade surplus — $112 billion in 2025 — places it under scrutiny. A material increase in tariffs would impact export-oriented manufacturing, particularly electronics and textiles, which together account for 48% of total exports.

Diversification of export markets has accelerated. Exports to ASEAN grew 18% in 2025, and shipments to India and the Middle East increased by 22% and 15% respectively. While these markets are smaller in absolute terms, the growth trajectory suggests that Vietnam's trade profile is gradually becoming less concentrated.

Domestic Consumption and Investment

Private consumption contributed 3.2 percentage points to 2025 GDP growth, supported by wage growth in manufacturing and services, low unemployment (2.3%), and a rebound in consumer confidence. Retail sales growth averaged 8.4% for the year, with particular strength in food and beverage, electronics, and automotive.

Fixed asset investment grew 7.1% in 2025, with the state sector accounting for 32% of the total. Public investment disbursement improved significantly in the second half, as administrative bottlenecks around land clearance and procurement were addressed. Key infrastructure projects — including sections of the North-South Expressway and Long Thanh International Airport — are progressing on revised timelines, with completion expected between 2027 and 2030.

Real estate investment remains subdued relative to the 2019 peak, but transaction volumes in residential markets showed signs of stabilisation in Q4 2025. The government has introduced a series of measures to ease credit access for homebuyers and reduce procedural delays for project approvals. The impact of these measures on 2026 investment figures will depend on execution at the provincial level.

Sectoral Outlook

Manufacturing is expected to grow 7.5% to 8% in 2026, supported by FDI inflows into electronics, automotive components, and renewable energy equipment. Samsung, Foxconn, and Luxshare have all announced expansion plans for the first half of 2026. The question is whether domestic suppliers can capture a larger share of value-added, or whether growth remains concentrated in assembly and processing.

Abilities are forecast to grow 6.5%, with tourism recovery providing a meaningful tailwind. International visitor arrivals reached 17.5 million in 2025, approaching the pre-pandemic record of 18 million. The government has extended visa-free entry to additional nationalities and streamlined e-visa procedures, supporting growth in hospitality, transport, and retail.

Agriculture faces structural headwinds, including climate variability and land fragmentation. Growth in the sector is projected at 2.5% to 3%, below the economy-wide average. However, aquaculture and high-value horticulture continue to perform well, supported by export demand and improved cold chain infrastructure.

Risks to the Outlook

The balance of risks is tilted to the downside. A sharp contraction in external demand — whether from US tariff policy, Chinese economic weakness, or European stagnation — would directly impact Vietnam's growth model. Domestic risks include slow progress on infrastructure disbursement, continued real estate sector fragility, and the potential for credit stress among smaller banks.

On the upside, accelerated relocation of manufacturing capacity from China could drive FDI above the $24 billion baseline. Vietnam's participation in the global semiconductor supply chain is still in early stages, and meaningful expansion in this sector would lift both growth and productivity.

Conclusion

Vietnam's 2026 growth outlook is constructive but not complacent. The fundamentals — a young workforce, stable macroeconomic policy, deep integration into global supply chains, and improving infrastructure — remain intact. The question for investors and policymakers is whether the country can navigate external headwinds while addressing domestic structural constraints. The coming year will provide meaningful signals on both fronts.