Four 2025 forecasts for Vietnamese economy given Trump tariff tensions: broker

Vietnam’s GDP growth in 2025 is projected to reach 6%, down from the previous forecast of 7% - an adjustment that reflects a scenario in which the U.S. imposes a reciprocal tariff of around 20% on Vietnamese goods, according to KB Securities Vietnam (KBSV).

The broker made four key forecasts in its report released late last week.

Firstly, Vietnam’s GDP is expected to grow by 6% in 2025, compared to the earlier estimate of 7%. This revision takes into account potential risks stemming from a "Trade War 2.0" scenario.

In response to external challenges, the Vietnamese government is anticipated to prioritize domestic growth drivers - particularly through increased public investment and credit expansion, assuming the exchange rate does not rise more than 4%.

Secondly, inflation is forecast to remain at 4% for the full year, within the government’s target of 4.5%. Despite pressures from the exchange rate, inflation is expected to stay under control due to projections that prices for food, fuel, and other essential commodities will either decline slightly or stabilize.

Thirdly, U.S. tariff policies are likely to negatively affect both Vietnam’s economic growth and global trade. KBSV has raised its projection for exchange rate fluctuations, with the USD/VND exchange rate expected to rise by around 4% compared to the end of 2024.

During periods of exchange rate volatility, the State Bank of Vietnam is expected to intervene through measures such as selling foreign exchange reserves, issuing treasury bills, and raising key interest rates.

Fourthly, lending and deposit interest rates are expected to remain stable during the 90-day U.S. tax deferral period or until a final post-negotiation tariff policy is announced.

If the exchange rate or inflation rises sharply, maintaining low interest rates will become challenging. In such a scenario, KBSV predicts deposit interest rates may rise by 1-2%, while lending rates could increase more gradually - by about 0.5–1%.

A tariff of 20-25% is the best case, which puts Vietnam in line with Japan, South Korea, and the EU, and a 46% worst case would force the economy to undergo immediate structural changes, according to Maybank's release on April 12.

Maybank said is hopeful of a favorable tariff reduction after 1-2 months. Meantime, Vietnam needs to leverage fiscal and monetary tools to mitigate the impact of tariffs imposed by President Donald Trump.

Based on this, the bank presents three scenarios. First, a 30-35% base case tariff, which helps Vietnam remain competitive with regional FDI rivals like Indonesia, Thailand, India, and Bangladesh.

Second, a 20-25% best case, which puts Vietnam in line with Japan, South Korea, and the EU and allows it to remain an FDI darling.

Third, a 46% worst case, which forces the economy to undergo immediate structural changes. Trump has indicated an openness to negotiations, and Maybank said it hopes to see a tariff reduction within the next 1-2 months.

President Trump on April 2 said that he would levy 46% tariffs on imports from Vietnam as part of a new wave of global impositions, effective from April 9.

On April 9, he dropped his reciprocal tariffs for countries reaching out to the U.S. to negotiate to 10% for 90 days. The 90-day reprieve is applied to nearly 90 nations except for China.