Ho Chi Minh City (VNA) – Singapore’s United Overseas Bank (UOB) has raised its forecast for Vietnam’s GDP growth in 2026 to 9.2% from 8.5%, following stronger-than-expected third-quarter performance and upward revisions to first-half figures.
However, the bank said the 10% growth target remained difficult to achieve, while rising inflation would complicate monetary policy management.
In its latest macroeconomic report, UOB also raised its 2027 growth forecast to 8.8% from 8.4%.
Vietnam’s GDP grew 9.95% year-on-year in the third quarter, bringing growth in the first nine months to 9.01%, above UOB’s forecast of 9% and the 8.65% Bloomberg consensus.
To achieve its full-year forecast, Vietnam would need fourth-quarter growth of around 9.7%, supported by year-end public investment disbursement, a seasonally strong export quarter, and record FDI inflows.
The official 10% target would require roughly 12.5–13% growth in Q4, and likely remains beyond reach, though 2026 growth is set to beat 2025's 8% by a clear margin, UOB said.
S&P Global’s manufacturing Purchasing Managers’ Index (PMI) fell from 53.3 in August to 51.9 in September, while new export orders declined for a second consecutive month, at the fastest pace since April.
UOB’s upgraded 2027 forecast reflects expectations that registered FDI will increasingly translate into production capacity, alongside industrial upgrading and higher value manufacturing.
In the first nine months of 2026, registered FDI reached 50.36 billion USD, up 76.4% year-on-year, while disbursed FDI rose 12.1% to 21.07 billion USD.
Key risks include energy price spikes given the unresolved US-Iran conflict, possible tighter US tariffs following the 2026 midterm elections, power supply and other infrastructure constraints, and delays in public investment execution.
UOB also raised its average inflation forecast for 2026 to 4.7% from 4.1%. The consumer price index (CPI) increased 5.08% year-on-year in September, while average inflation in the first nine months reached 4.52%, exceeding the official target of 4.5%. The bank expects headline inflation to remain around 5% in the fourth quarter.
Above-target inflation, rapid credit growth and the prospect of further US Federal Reserve interest rate increases are complicating monetary policy management for the State Bank of Vietnam (SBV).
Yet tighter monetary policy may do little to curb largely supply-driven inflation pressures.
"We expect the SBV to hold the refinancing rate at 4.5% through 2027, relying on open market operations and credit-quota guidance, but see the risk now skewed towards a hike," UOB said./.
