Vietnam’s economic landscape 'positive' amid global headwinds: Prime Minister

Vietnam’s socio-economic situation has been trending positively, with stable macroeconomic conditions, inflation under control, and major economic balances well maintained, says Prime Minister Pham Minh Chinh.

Indicators such as budget deficit, public debt, government debt, and external debt are all being effectively managed, he told the government’s monthly meeting on Wednesday.

Growth is being driven by all three key sectors: agriculture, industry, and services, he said, adding that long-stagnated projects with total investment capital of around $240 billion and over 200,000 hectares of land are being actively resolved.

"International organizations, foreign governments, and global partners have praised Vietnam’s efforts and achievements in socio-economic development," he said.

According to a report the Ministry of Finance presented at the meeting, Vietnam’s socio-economic landscape in May and the first five months of 2025 continued to show positive improvement, outperforming both the previous month and the same period last year.

Core sectors of the economy have sustained positive growth momentum. The index of industrial production (IIP) in the five months went up 8.8% year-on-year, while total retail sales of goods and consumer services increased by 9.7%.

The country welcomed over 9.2 million international arrivals, up 21.3% compared to the same period last year. Registered foreign direct investment (FDI) capital reached $18.4 billion, up 51.1% year-on-year, while disbursed capital was $8.9 billion, up 7.9%.

The consumer price index (CPI) rose by an average of 3.21% over the five-month period.

The monetary market remained broadly stable, with lending rates - particularly for short-term loans - continuing to decline. State budget revenue hit nearly 58% of the year's target, up 24.5% year-on-year; while state budget expenditure expanded 27.7%.

Export-import turnover saw a significant rise in May, with exports up 14%. The trade surplus estimated at $4.67 billion

Public investment disbursement hit VND199.3 trillion ($7.64 billion) at the end of May, or 24.13% of the Prime Minister’s assigned plan and VND56 trillion higher than the same period last year.

Despite these positive signs, the Prime Minister acknowledged that the economy still faces challenges. On the global front, complex developments persist. Many international organizations have lowered their growth forecasts for 2025 due to escalating strategic competition and reduced global trade. These factors are impacting large markets and global supply chains.

Domestically, macroeconomic management remains under pressure. The real estate market shows little improvement, while the gold market remains volatile. Smuggling, trade fraud, counterfeit goods, and food safety violations are still complex issues. Administrative procedures in some areas remain cumbersome.

The cabinet leader stressed that ministries and agencies must respond clearly and substantively to proposals from localities and businesses, avoiding vague or generic replies.

He requested all cabinet members to act proactively and promptly in implementing tasks to meet the 2025 growth targets and those for the current term.

Concluding the session, the leader directed ministries and local authorities to urgently remove legal and institutional bottlenecks, turning regulatory frameworks into a competitive advantage.

He requested concerned agencies to focus on measures in response to countries' policy changes, including U.S. tariffs, while maximizing the benefits of free trade agreements (FTAs) to enhance the competitiveness of Vietnamese goods.

Chinh stressed the need to allocate an additional over VND20 trillion ($766.72 million), ensuring at least 3% of the state budget is dedicated to science and technology.

All government agencies are to cut regular expenditures by 10% to redirect resources towards major projects that revitalize traditional drivers of economic growth and promote new drivers, he stressed.

May saw a more stable picture in terms of U.S. tariff policies than April, helping lead to a renewed expansion in output and improved business confidence, says Andrew Harker, economics director at S&P Global Market Intelligence.

But the news around tariffs continues to play a key part in determining trends in the Vietnamese manufacturing sector, Harker added in a note released on Monday by S&P Global.

The S&P Global Vietnam Manufacturing Purchasing Managers' Index posted below the 50.0 no-changemark for the second consecutive month in May, but rose to 49.8 from 45.6 in April to signal a near-stabilization of business conditions in the sector.