Hanoi (VNA) – The United Overseas Bank (UOB) has forecast stable economic expansion for Vietnam in 2026, buoyed by robust exports, even as tariff threats and global volatility loom, according to its Vietnam outlook for the first quarter of 2026 released on December 22.
Export boom driven by US demand
UOB economists noted that Vietnam's third-quarter 2025 real GDP growth hit 8.23% year-on-year, the strongest since the post-pandemic rebound in the second quarter of 2022, following 8.19% expansion in the prior quarter. Exports and manufacturing continued to lead, despite US tariff headwinds.
From January to October 2025, exports jumped 16.8% year-on-year against a high prior-year base of 14.2%. Shipments to the US rose by 28.1% from 24.3% in 2024, fueled by front-loading after Washington set a global baseline “reciprocal” tariff at 10%. The cumulative trade surplus narrowed to 18.7 billion USD from 22.4 billion USD a year earlier, reflecting surging imports of production inputs for export-oriented manufacturing.
Manufacturing output climbed 10.8% year-on-year in the first nine months of 2025, up from 9.4% in the same 2024 period. The Purchasing Managers’ Index stayed above the 50-point threshold for four straight months, signaling sustained momentum for the sector.
UOB pointed out that foreign direct investment (FDI) has proved resilient despite potential US policy swings, supported by confidence in Vietnam and the wider ASEAN bloc.
Disbursed FDI by October reached 21.3 billion USD, topping the full-year projection of 20 billion USD and exceeding the 19.6 billion USD recorded in the prior year. Registered FDI rose 15% to 31.5 billion USD from 27.3 billion USD in 2024.
Domestic consumption stayed firm, with retail sales up 9.8% in the January-October period versus 8.6% a year ago. Foreign tourist arrivals surged 21% to 17.17 million, on track to eclipse the pre-pandemic peak of 18 million set in 2019 and further lifting consumer spending.
Positive outlook for 2026, with lingering risks
With nine-month 2025 real GDP growth at 7.85%, UOB economists maintain an upbeat view for 2026. The primary downside stems from “reciprocal” tariffs imposed in August, which may elevate US import costs and damp global trade next year as US buyers absorb higher prices.
A tough year-on-year comparison with a solid fourth quarter of 2024 will also pressure the current quarter amid escalating tariffs and trade tensions. UOB projects fourth-quarter 2025 growth at 7.2%, yielding full-year expansion around 7.7%.
Meeting the official 8.3%-8.5% target would be an uphill task, demanding 9.7%-10.5% growth in the final quarter, an HSBC economist said.
According to the report, Vietnam’s growth in 2026 may moderate slightly to around 7%, mainly due to the high base effect from 2025 and a slowdown in export orders that were previously front-loaded, though Vietnam's core fundamentals should remain solid.
On monetary policy, UOB expected the State Bank of Vietnam to hold the refinancing rate steady at 4.5% through 2026. Inflation, averaging 3.3% over the first 10 months of 2025 on rises in housing, construction materials and healthcare costs, is seen constraining scope for further easing./.
