The International Monetary Fund (IMF) stated that despite Vietnam's robust economic recovery in 2024 and the first part of 2025, the outlook is limited by significant global uncertainty surrounding trade and economic policies.
Given the full-year impact of the new US tariffs (announced in July) and the unwinding of the majority of the one-time 2025 government stimulus, economic growth is expected to slow to 6.5% in 2025 and further slow in 2026, the report stated.
If economic growth significantly slows, there is room for more fiscal support, but there isn't much room for monetary easing. After recently wrapping up its Article IV consultation with the nation, the IMF stated that it will be crucial to allow for greater exchange rate flexibility and to bolster the financial sector's resilience.
It stated that there is a chance to increase medium-term growth and lessen external vulnerabilities through the implementation of the ambitious reform agenda and infrastructure upgrades.
Although it is still below the target, the country's inflation rate increased slightly in recent months, reaching 3.6% year over year (YoY) in June. In 2024, the current account surplus hit a record 6.6% of GDP.
There are a lot of downside risks. Exports and investment could be further weakened by a tightening of global financial conditions or a further escalation of trade tensions.
The IMF noted that tighter financial conditions and high corporate indebtedness could cause financial stress to resurface domestically.
On the plus side, medium-term growth could be considerably increased by effectively implementing structural reforms and infrastructure projects. It further stated that the economic outlook would improve if tensions surrounding international trade eased.
