As the forecasts for Vietnam’s economy in 2026 start to roll in, this article looks at how the economy performed in 2025 and what it says about what might happen moving forward into 2026.
Vietnam’s 2025 economic transition journey really starts in July of 2024, with the passing of the former General Secretary Nguyen Phu Trong and the subsequent ascension to the top role the following month by To Lam.
Likewise, at the other end, Vietnam’s 2025 economic transition journey hasn’t really ended yet, or at least can’t really be fully understood until after the 14th National Party Congress concludes later this month.
This is because the period in between, specifically the economic reforms therein, look to have largely been in response to these two events, with the new leadership looking to economic growth to support its mandate to lead.
The framework, for example, an 8 percent GDP growth target set at the beginning of 2025, was well above Vietnam’s average GDP growth of 6.14 percent over the preceding ten years.
A stretch target to be sure, it was particularly ambitious in the context of an incoming US administration that was very openly opposed to carrying trade deficits, with which it had one of its biggest with Vietnam.
Moreover, whereas the broad strokes of US trade policy were understood at the beginning of the year, the finer details were not — a 46 percent tariff announced in April, cut down to 20 percent in August, on goods entering the country from Vietnam, should have given pause for thought and perhaps a realignment of growth expectations.
No realignment, however, was forthcoming.
That said, two-way trade with the US did finish the year at US$172.5 billion, with Vietnam recording a surplus of US$133.9 billion, according to Vietnam Customs data.
This was a big jump from US$104.4 billion in 2024, so it was clearly not as bad as it looked like it might have been all those months earlier.
But trade was only part of the equation.
Realising that in the past it had taken about US$2 of credit to drive US$1 of GDP growth, to achieve 8 percent in 2025, it was determined that credit growth would need to climb 16 percent.
With credit at 135 percent of GDP already, credit growth would significantly outpace GDP growth, so that 2:1 became 2.6:1 by the end of the first half of the year, and 3:1 by the end.
Moreover, it was creating significant risks in the banking sector, a point made by myriad international observers — the IMF and Fitch Ratings, for example — but also the SBV’s own deputy governor, who raised concerns it was putting long-term pressure on inflation.
Against this backdrop, though the State Bank of Vietnam (SBV) allowed the dong to slide a little, it avoided an interest rate hike, instead spending the country’s foreign currency reserves. These are now around US$80 billion, below IMF-recommended levels (three months’ worth of imports), which should mean the SBV buying US dollars moving forward to get back into the safe zone.
The point is that credit growth may have had short-term benefits, but long-term, it has significant downsides.
Of course, pundits have pointed to a number of other factors driving growth.
Foreign direct investment, for example, has continued to climb, reaching US$27.62 billion (disbursed) in 2025, up 9 percent over 2024.
Resolution 68 on private sector development, issued early in the year, was also heralded as ushering in a “new dawn” for the domestic private sector, with moves to condense 63 provinces down to 34 seen as a “game-changer”.
Neither, however, appear to have realised any significant, tangible results in terms of economic growth.
That said, the acceleration of key infrastructure projects, another 2025 oft-cited growth pillar, does seem to have somewhat materialised, with state budget disbursements up 19.7 percent year-on-year.
This policy, however, looks to have been a victim of its own success, with the jump in the number of projects causing a shortage of construction materials.
Moreover, government borrowing costs have risen this year, gaining an average of 1.3 percentage points over the last twelve months, so financing that infrastructure heading into 2026 is going to be even more expensive.
The point being that the decisions made in 2025 have favoured short-term results over long-term economic sustainability.
Politically, however, heading into the 14th National Party Congress, 2025’s 8.02 percent for the year can work in its favour, assuming no one scratches the surface.
In this context, making any sort of assessment of what might happen in 2026 can really only happen after the congress concludes.
That is to say, if the new leadership feels secure, it may be more willing to move toward politically risky, yet economically more sustainable, policy, raising interest rates or capping lending, for example; if the new leadership, however, doesn’t feel secure, then it may mean more cheap credit and more economic risk.