Vietnam’s GDP is forecast to grow 5.6 percent in 2025 and 5.3 percent in 2026, down from 7.1 percent in 2024, Fitch Ratings has said→view source.
The ratings agency has also affirmed Vietnam’s Long-Term Foreign-Currency IDR at BB+ with a stable outlook, citing strong growth prospects.
It has, however, also highlighted risks from rising leverage, trade policy uncertainty, and structural weaknesses in governance and the banking sector.
Key details:
- Vietnam’s growth is projected to decelerate to 5.6 percent in 2025 and 5.3 percent in 2026 as external headwinds, particularly US tariff risks, weigh on the outlook.
- Export dependence remains extreme at 83 percent of GDP, with 30 percent concentrated in the US market and high input reliance on China, leaving the economy highly exposed to US trade policy shifts.
- Fitch warns that a 46 percent US tariff could undermine Vietnam’s export-driven growth model, posing a risk to medium-term economic viability.
- Fitch flags policy risks: a planned 8 percent growth target for 2025 and aggressive 16 percent credit growth could fuel already elevated leverage.
- Economy-wide leverage is estimated at 135 percent of GDP — one of the highest among BB peers — driven by persistent credit-driven growth strategies.
- Banking sector vulnerabilities are structural: thin capital buffers and pressure on asset quality could worsen if loan growth is ramped up to offset external shocks.
- FX reserves fell 10 percent year-on-year to US$81.2 billion, with coverage now at just 2.2 months of imports — a notably weak position relative to peers.
- The dong’s underperformance (down 2 percent YTD) may continue under tariff pressure, adding to external vulnerabilities.
- While government debt is still moderate at a projected 34.2 percent of GDP, Fitch underscores rising fiscal risks from higher public investment and SOE exposures (SOE debt at 19.7 percent of GDP).
- Fitch penalises Vietnam’s score with two negative notches: one for an underdeveloped macroeconomic policy framework reliant on leverage, and one for structural banking sector and SOE risks.
- Governance remains a key rating constraint: Vietnam ranks in the 41st percentile on World Bank indicators, with poor scores for transparency, rule of law and political rights impacting the overall credit profile.
Fitch’s analysis reinforces the view that Vietnam’s export-led growth model faces rising external risks and is underpinned by unsustainable credit dynamics. Without improved policy transparency and reduced structural leverage, sovereign rating progress will remain constrained — and vulnerabilities could widen sharply if US tariff action escalates.
See also: Vietnam’s Economy 2025: GDP, FDI & Key Industries Overview