UOB remains upbeat on Việt Nam’s economic outlook despite global uncertainty

UOB remains upbeat on Việt Nam’s economic outlook despite global uncertainty

UOB maintained its forecast for Việt Nam’s gross domestic product (GDP) growth at 7.5 per cent in 2026, with first-quarter growth projected at around 7 per cent.

Đinh Đức Quang, managing director of the Currency Business Division at UOB Vietnam. — Photo courtesy of UOB Vietnam

Việt Nam’s economic prospects for 2026 remain positive thanks to stable macro-economic fundamentals and strong domestic growth drivers although global geopolitical tensions and trade policy shifts may pose new risks, analysts at United Overseas Bank (UOB) said in a recent report.

In its latest update on global and regional economic prospects, the Singapore-based bank noted that the world economy is likely to remain volatile in 2026 as geopolitical conflicts and policy changes continue to shape global markets.

Proposals related to new US tariffs are increasing risks to global trade, while geopolitical tensions in the Middle East, particularly conflicts involving the US, Israel, and Iran, are making energy and commodity markets more sensitive to political developments.

The Executive Director in Global Economics and Markets Research at UOB, Suan Teck Kin, said evolving US tariff policies and escalating tensions in the Middle East are key factors affecting economic stability in Asia.

An escalation of conflict in the Middle East and risks to the Strait of Hormuz have become key macro-economic threats to Asia, mainly through higher oil prices, rising inflationary pressures, weaker domestic currencies, and deteriorating market sentiment, he said.

Despite these challenges, UOB has maintained its growth and inflation forecasts for most Asian economies, including Việt Nam. It acknowledged downside risks to growth and upside risks to inflation.

The bank noted that Việt Nam entered 2026 on a solid footing after posting economic growth of 8.02 per cent in 2025, reflecting a strong rebound in manufacturing, exports, and domestic consumption.

On that basis, UOB maintained its forecast for Việt Nam’s gross domestic product (GDP) growth at 7.5 per cent in 2026, with first-quarter growth projected at around 7 per cent.

Key growth drivers are expected to include the Government’s commitment to accelerating infrastructure investment, continued expansion of export-oriented manufacturing, and sustained inflows of foreign direct investment (FDI).

However, external uncertainty could still affect the outlook. A proposed global tariff of 10 per cent by the US could impact trade flows and supply chains, while fluctuations in energy prices driven by geopolitical tensions may raise production and logistics costs.

Commenting on the potential impact of Middle East tensions on domestic fuel prices, Đinh Đức Quang, managing director of the Currency Business Division at UOB Vietnam, said the conflict remains a major factor influencing global oil prices, which in turn affects domestic fuel costs, an important input for manufacturing, transport, and other sectors.

Nevertheless, he noted that Việt Nam has been working to diversify its energy supply sources in recent years and, at the same time, enhance energy self-sufficiency through exploiting crude oil, expanding domestic refining capacity, and accelerating the transition to renewable energy such as solar and wind power. These measures could help mitigate the impact of global fuel price volatility.

Regarding the monetary policy, UOB expects the State Bank of Vietnam to keep the refinancing rate unchanged at 4.5 per cent as economic growth remains resilient and inflation is under control.

Việt Nam’s inflation eased to 2.53 per cent year-on-year in January 2026, down from 3.48 per cent in December 2025 and lower than the market forecast of 3.1 per cent, with price increases mainly driven by food, housing, and education.

Meanwhile, oil prices may rise in the short term due to tensions in the Middle East. Under UOB’s baseline scenario, Brent crude could climb to around US$90 per barrel in the second quarter of 2026 before easing to about $80 by the end of the year.

Drawing from the experience of 2022, when oil prices surged to $128 per barrel following the Russia – Ukraine conflict, UOB estimates that every $10 increase in Brent crude could push Việt Nam’s consumer price index (CPI) up by 0.3–0.4 percentage points after a lag of two to three months, while reducing GDP growth by about 0.6–0.9 percentage points over the following two to four quarters.

On the currency market, the Vietnamese đồng has given up some of its early-year gains amid rising geopolitical tensions, with the USD/VND exchange rate rebounding to around VNĐ26,200 per US dollar in early March.

While global risk aversion may continue to pressure the Vietnamese đồng in the near term, UOB expects its medium-term outlook to remain stable, supported by strong economic fundamentals, robust FDI inflows, and the possibility of Việt Nam being upgraded to emerging market status later this year.

The bank forecasts the USD/VND exchange rate to fluctuate within a range of about 2–3 per cent in 2026, reaching around VNĐ26,400 per US dollar in the second quarter, VNĐ26,200 in the third quarter, and easing to approximately VNĐ26,100 by the end of the year. 

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