Việt Nam's growth to moderate as external risks intensify: ADB

Việt Nam's growth to moderate as external risks intensify: ADB

Gross domestic product (GDP) growth is projected to moderate to 7.2 per cent in 2026 and 7.0 per cent in 2027 under the ADB's baseline scenario, after expanding by 8.0 per cent in 2025.

Participants attended a press meeting on the Asia Development Outlook for April 2026 in the morning of April 10. — VNS Photo Ly Ly Cao

Việt Nam’s economy sustained strong momentum in 2025 and into early 2026, supported by robust exports, strong investment and accommodative policies, but is expected to face increasing headwinds as global uncertainties weigh on trade and capital flows, according to the Asian Development Bank (ADB).

Gross domestic product (GDP) growth is projected to moderate to 7.2 per cent in 2026 and 7.0 per cent in 2027 under the ADB’s baseline scenario after expanding by 8.0 per cent in 2025.

“The economy is projected to grow by 7.2 per cent in 2026 and 7.0 per cent in 2027,” Nguyễn Bá Hùng, principal country economist at ADB Vietnam, said at a press meeting on the Asian Development Outlook for April 2026, noting that growth will continue to be supported by public investment and domestic demand.

Public investment is expected to remain a key growth driver, with disbursement projected at around US$38 billion in 2026, particularly in infrastructure projects that support construction and logistics.

However, the external environment is becoming increasingly challenging. The escalation of geopolitical tensions in the Middle East has disrupted global energy markets and supply chains, driving up oil prices and transportation costs.

“The Middle East conflict has disrupted global energy markets,” Hùng said, highlighting reduced shipping activity through the Strait of Hormuz and rising benchmark crude oil prices.

At the same time, trade policy uncertainty remains elevated, particularly following new tariff measures by the US.

These developments are expected to weigh on global demand and complicate export prospects for trade-dependent economies such as Việt Nam.

Early data for 2026 indicate a softening in trade dynamics. In the first two months of the year, imports grew faster than exports, resulting in a trade deficit of $3 billion. This reflects both stronger domestic demand for intermediate goods and weakening external demand.

Foreign investment trends also suggest a more cautious outlook. Newly registered FDI declined by 12.6 per cent year-on-year in the first two months, although disbursements continued to increase, indicating that investors are prioritising the expansion of existing projects rather than committing to new ventures.

Hùng noted that uncertainties in the Middle East may shift the region’s investment flows to other countries, including Việt Nam.

However, he cautioned that such flows are inherently fluid.

“In the short term, there may be outflows from the Middle East due to instability, but these are largely indirect flows and can shift quickly across markets,” he said, adding that reconstruction demand in affected regions could eventually draw capital back.

Domestic demand presents mixed signals.

Retail sales growth slowed to 7.9 per cent in the first two months of 2026, while approximately 77,000 businesses exited the market over the same period, underscoring ongoing cost pressures and weaker consumption sentiment.

Inflation is projected to rise to 4.0 per cent in 2026, reflecting the combined effects of fiscal expansion, credit growth, exchange rate depreciation and higher global commodity prices.

It is expected to ease slightly to 3.8 per cent in 2027 as external price pressures stabilise.

The ADB also highlighted structural challenges in the financial system, particularly the underdevelopment of the corporate bond market. While the market has grown rapidly in recent years, it is still characterised by limited transparency, a narrow investor base and heavy reliance on private placements.

“The corporate bond market has become an increasingly important source of medium- and long-term finance,” Hùng said, while emphasising the need to strengthen disclosure standards and broaden investor participation.

Financial sector risks, such as rising non-performing loans (NPLs), liquidity pressures and exchange rate volatility, may constrain credit growth and increase financing costs, potentially affecting investment activity.

In this context, global developments are expected to remain a key determinant of Việt Nam’s economic outlook.

“External risks to the outlook have deepened on the downside,” Hùng said, citing geopolitical tensions, trade policy uncertainty and potential supply chain disruptions as major factors shaping the near-term trajectory. 

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