ADB forecasts 6.3% GDP growth rate for Vietnam in 2025, country aims for 'at least 8%'

The Asian Development Bank on Wednesday revised its Vietnam GDP growth projection down to 6.3% in 2025 and 6% in 2026, from 6.6% and 6.5% in April, respectively.

The forecast in April had been finalized before President Trump on April 2 announced he would levy massive 46% tariffs on imports from Vietnam as part of a new wave of global impositions.

Meanwhile, the bank's latest forecast in its "Asian Development Outlook (ADO) July 2025" was released three weeks after Vietnam's Party chief To Lam and U.S. President Donald Trump had stated that the two countries had reached a reciprocal trade agreement framework.

On the same day, on July 2, on Truth Social, Trump wrote that Vietnam will pay the United States a 20% tariff on goods sent into the powerhouse, and a 40% tariff on any "transshipping".

Last year, Vietnam's economic expansion was a robust 7.1%. The figure for the first half of this year was 7.52% - a record high in 15 years, and it was 7.96% for Q2 this year.

"Vietnam’s economy is expected to remain resilient in 2025 and 2026, although growth may slow in the near term due to tariff pressures," the ADB wrote in the release.

Strong export and import growth, along with a surge in foreign investment disbursement, drove economic performance in H1/2025.

Foreign direct investment pledges rose by 32.6%, while disbursement increased by 8.1% year-on-year, indicating strong international confidence in the country’s economic prospects.

Public investment disbursement reached its highest level since 2018, at 31.7% of the annual plan and an increase of 19.8% from the same period in the previous year.

Front-loading of exports to cope with the tariff uncertainty drove trade performance, which is "unlikely to sustain over the second half of the year," according to the bank.

"The trade deal with the U.S., announced in early July 2025, imposed staggered higher U.S. tariffs on exports from Vietnam, which is expected to dampen export demand for the rest of 2025 and into 2026," the ADB stated.

"The PMI has signaled a slowdown in manufacturing since late 2024. Notwithstanding the heightened risks from tariff uncertainty, the domestic reforms, if effectively and swiftly implemented, can mitigate such risks with strengthened domestic factors," it added.

Inflation is forecast to decline to 3.9% in 2025 and 3.8% in 2026.

While the ADB put its Vietnam GDP growth projection at 6.3% for this year, the target set out the National Assembly, the country's legislature, is "at least 8%".

But at an online dialogue between the government and leaders of localities on economic growth scenarios on July 16, Prime Minister Pham Minh Chinh made it clear that Vietnam needs to achieve a GDP growth rate of about 8.3-8.5% this year, creating momentum to reach a double-digit level in the 2026-2030 period.

"At this conference, the Government announces such specific figures that we need to strive for. There will be a new resolution on assigning targets and managing growth scenarios," he noted.

Exports, FDI, stimulation of domestic consumption, and heightened public investment are expected to be major driving forces of the country's economic enlargement in 2025.

In a release on July 8, Singapore's bank UOB said it sees the worst of the tariff tensions has past for Vietnam and are factoring in a modest pace of exports growth in 2025.

Accordingly, UOB revised up its forecast for Vietnam’s GDP growth in 2025 by 0.9% percentage points to 6.9%. It pegs the growth projections for Q3/2025 and Q4/2025 of around 6.4%.

Also in its Asian Development Outlook (ADO) July 2025, the ADB has lowered its growth forecasts for economies in developing Asia and the Pacific this year and next year. The downgrades are driven by expectations of reduced exports amid higher U.S. tariffs and global trade uncertainty, as well as weaker domestic demand.

ADB forecasts the region’s economies will grow by 4.7% this year, a 0.2 percentage point decline from the projection issued in April. The forecast for next year has been lowered to 4.6% from 4.7%, according to the bank's Asian Development Outlook (ADO) July 2025 released on Wednesday.

Prospects for developing Asia and the Pacific could be dented further by an escalation of U.S. tariffs and trade tensions.

Other risks include conflicts and geopolitical tensions that could disrupt global supply chains and raise energy prices, and a worse-than-expected deterioration in the property market of China.

“Asia and the Pacific has weathered an increasingly challenging external environment this year. But the economic outlook has weakened amid intensifying risks and global uncertainty,” said ADB chief economist Albert Park.

“Economies in the region should continue strengthening their fundamentals and promoting open trade and regional integration to support investment, employment, and growth.”

Growth projections for China, the region’s largest economy, are maintained at 4.7% this year and 4.3% next year. Policy stimulus for consumption and industrial activity is expected to offset continuing property market weakness and softening exports.

India, the region’s second-largest economy, is forecast to grow by 6.5% this year and 6.7% next year, down 0.2 and 0.1 percentage points, respectively, from April projections, as trade uncertainty and higher U.S. tariffs affect exports and investment.

Economies in Southeast Asia will likely be hardest hit by worsened trade conditions and uncertainty. ADB now predicts the subregion’s economies will grow 4.2% this year and 4.3% next year, down roughly half a percentage point from April forecasts for each year.

Bucking the downward trend are economies in Caucasus and Central Asia. The subregion’s growth projections have been raised by 0.1 percentage points for both this year and next to 5.5% and 5.1%, respectively, largely reflecting an anticipated boost in oil production.

Inflation in developing Asia and the Pacific is projected to continue slowing, amid easing oil prices and strong farm output reducing food price pressures. ADB forecasts regional inflation of 2% this year and 2.1% next year, compared with its April projections of 2.3% and 2.2%, respectively.