Vietnam starts 2026 on a firm ground: UOB economist

With an economic expansion of 8.02% in 2025, Vietnam has shown its "resilience to start 2026 on a firm ground", says Suan Teck Kin, executive director in global economics and markets research at UOB Singapore.

The economist described Vietnam’s economic performance in 2025 as "outstanding", despite pressure from U.S. tariffs.

In a release late last week, Suan Teck Kin said his bank has raised its 2026 Vietnam growth forecast to 7.5% (from 7% on December 22, 2025), "reflecting the economy’s resilience, momentum and positive prospects".

However, he noted that high statistical base, potential fading of exports frontloading as well as uncertainty over US tariff policy are key risks that could temper the growth trajectory.

"To recap, Vietnam is particularly vulnerable to trade frictions such as US tariffs, due to the open nature of its economy: exports of goods and services account for 83% of Vietnam’s GDP, the second highest in ASEAN after Singapore (182%), as well as its significant exposures to the US market," the executive wrote.

The U.S. accounted for 30% share of Vietnam's exports of $406 billion in 2024 and was its largest market, followed by China (15%) and South Korea (6%).

The major products sold to the U.S. in 2024 included electrical products HS85 ($41.7 billion), mobile phones and related items HS84 ($28.8 billion), furniture HS94 ($13.2 billion), footwear HS64 ($8.8 billion), apparel knitted HS61 ($8.2 billion), and apparel nonknitted HS62 ($6.6 billion). Products from these sectors accounted for nearly 80% of the shipments that Vietnam sent to the U.S. in 2024.

"While Vietnam’s trade activities appeared to be robust so far despite US tariffs, one potential outcome is that exports orders could start to fade once the frontloading of orders ease and higher prices affect U.S. consumer demand especially into 2026," he added.

According to HSBC analysts, exports of the ‘right’ products, including electronics, amid AI-driven demand and widening market share in the U.S. are likely to shield Vietnam from some trade headwinds in 2026.

They expect the emphasis on infrastructure development to continue in the new year, accelerating key mega projects and lifting growth. National GDP growth is expected to hit 6.7% in 2026, the analysts wrote in a report released on Tuesday.

In the January 2026 edition of its Global Economic Prospects issued on Wednesday, the World Bank Group anticipated Vietnam's GDP growth at 6.3% in 2026 and 6.7% in 2027. The projected growth of Vietnam are 0.2 and 0.3 percentage points higher than those in the June 2025 edition of the report.

The figures are the highest in the East Asia & Pacific. According to the report, other top figures in the region in 2026 are China with 4.4%, Mongolia with 5.6%, the Philippines with 5.3%, Indonesia with 5%.

The National Assembly, Vietnam's legislature, on November 12 approved a resolution setting an economic expansion target of at least 10% for 2026, per capita GDP at $5,400-5,500, and inflation controlled at around 4.5%.

With a robust economic performance in 2025 and potentially any strong year in 2026, there is not very much flexibility for Vietnam's centra bank (State Bank of Vietnam) to ease policy at this moment, according to Suan Teck Kin, executive director in global economics and markets research at UOB Singapore.

Meanwhile, inflation pressures remain present, with inflation rate averaging at 3.2% (overall) and 3.3% (core, ex-food ex-energy) in 2025, compared to 3.6% and 2.85%, respectively, in 2024. Healthcare and education costs have been the main drivers of the firm inflation, although the trend appears to have stabilized somewhat.

The foreign exchange market is likely another key consideration for the SBV. The VND was the third worst performer in Asia 2025, declining by 3.1% against the USD, ahead of Indian rupee’s 4.8% and IDR’s 3.5% fall and trailing behind Philippine peso’s drop.

Based on the above factors, Suan Teck Kin said he expects the SBV to stay on hold with its refinance rate at 4.5% through 2026.