Vietnam's Economic Growth Forecast Downgraded Amid Global Policy Uncertainty

Strategic Insights -

Vietnam's economic growth prospects have taken a hit due to global policy uncertainty and slowing exports on escalating trade tensions. The Organisation for Economic Cooperation and Development (OECD) has revised Vietnam's economic growth forecast from around 7% to between 6% and 6.2% in 2025. Despite this downward revision, Vietnam remains among the economies with the most positive prospects in the year ahead, driven by robust private consumption and public investment. However, a volatile global trade environment is expected to weigh on overall momentum.

Key Takeaways:

  • The OECD forecasts Vietnam's economic growth at 6.2% this year and 6% next year, with a downward revision from around 7% in 2025 due to global policy uncertainty and slowing exports.
  • Vietnam remains among the economies with the most positive prospects in the year ahead, driven by robust private consumption and public investment, according to the OECD.
  • The State Bank of Vietnam maintained an expansionary monetary policy from June 2023, including rate cuts and credit growth targets, but the OECD warned of emerging inflation pressure that might prompt a shift to a more neutral fiscal setting.
  • United Overseas Bank (UOB) expects the Vietnamese dong to continue depreciating, citing the US's new reciprocal tariff measures announced in early April as a major concern.
  • UOB lowered Vietnam's growth forecast to 6% in 2025, down from an earlier projection of 7%, and expects the State Bank of Vietnam to hold its refinancing rate steady at 4.5%.
  • A return to pre-pandemic rates of 4% or lower would be possible if the labour market weakens and the forex exchange market stabilises, according to UOB.

Statistics:

  • Vietnam's economic growth forecast revised from 7% to 6% - 6.2% (OECD)
  • 6.2% and 6% as the forecasted economic growth for this year and next year, respectively (OECD)
  • Expansionary monetary policy maintained by the State Bank of Vietnam since June 2023 (OECD)
  • Refinancing rate expected to remain steady at 4.5% (UOB)
  • Return to pre-pandemic rates of 4% or lower possible if the labour market weakens and the forex exchange market stabilises (UOB)

Sources:

  • OECD (Source)
  • United Overseas Bank (Source)