The World Bank (WB), in its April Economic Outlook, said it expects Vietnam’s GDP growth to reach 6.3 percent this year. This stands in stark contrast to the government’s 10 percent growth target. So, why is the view from outside so different from that from within?
Earlier this month, the World Bank (WB), in its April Economic Outlook, said it expects Vietnam’s GDP growth to reach 6.3 percent this year.
The Asian Development Bank (ADB), in its Asian Development Outlook April 2026, was somewhat more optimistic, forecasting growth of 7.2 percent, with the United Overseas Bank (UOB) going even further still, in its Quarterly Global Outlook, forecasting GDP growth of 7.5 percent.
Yet all of these are still well below the government’s goal of 10 percent, a goal reinforced last week with the new Prime Minister dubbing it a “development imperative” in his inaugural speech to Vietnam’s National Assembly.
So, which is it likely to be?
Vietnam’s exposure to the conflict in the Middle East, which has choked energy exports coming out of the Persian Gulf, is significant.
The UOB estimates that for each US$10 the price of a barrel of Brent crude oil increases, Vietnam’s Consumer Price Index takes a 0.3 to 0.4 percentage point hit, with its GDP growth feeling a 0.6 to 0.9 percent downside.
Moreover, Vietnam is among the most exposed countries to US trade policy, the future of which is currently uncertain.
The UOB, ADB, and WB all identified these two factors as key risks, couching their forecasts in an abundance of caution.
That said, though efforts have been made to stabilise fuel prices and to negotiate a trade deal with the United States, the Government of Vietnam has shown little sign that these threats are weighing on its own expectations. That is, it has avoided revising its own growth targets down thus far.
It’s not clear what the aversion to a downgrade might be, but policy is often developed using growth targets as a basis, and therefore, a revision could trigger rewrites of other legislation.
The revised Power Development Plan 8 — which forms the foundation for what power generation and transmission infrastructure should be built and where — approved last year, for example, was designed around Vietnam’s GDP growing at least 10 percent this year and each year up to 2030.
Moreover, there are also the optics of a retreat.
Double-digit growth has become a hallmark of the government’s economic platform, with economic growth largely seen to support its claims of legitimacy. A revised growth target, in this context, likely seen as coming with political risks.
Instead, the government appears to be banking on domestic policy power pushing the local economy ahead, regardless of what the world economy does.
What that policy looks like, generally speaking, is investment in infrastructure, cutting red tape, and faster project approvals.
Notably, government literature talks about investing in education and driving innovation, too, but outcomes from these sorts of reforms take years to realise and are unlikely to have a significant impact in the near term.
Other rhetoric, around support for the state-owned and private sectors, has also failed to produce any significant new supporting policy.
As such, infrastructure spending will need to do a lot of the heavy lifting.
That said, what has arguably been the most powerful economic driver in recent years has been monetary policy, with low interest rates seeing billions of dong pumped into the local economy.
This has been helped along by a shift from limiting credit growth to avoid inflation to promoting credit as a means of driving the country’s economic expansion.
Last year, this saw GDP growth hit its target of 8 percent, on credit growth of about 19 percent, which also saw Vietnam’s private credit to GDP reach a staggering 146 percent.
A risky situation to be in, State Bank officials, in recent days, have said they are open to cutting credit growth targets, though confusingly, at the same time, have said they intend to ease interest rates to support growth.
It has not been made clear, however, if reducing targets would also mean applying limits.
That said, the State Bank may not have a choice with monetary policy in Vietnam directed by the government and only implemented by the bank.
And on that note, the government does have risk buffers it can use to counter the downsides of credit growth expansion.
For example, public debt to GDP is a relatively low 37 percent. With a self-imposed cap of 60 percent, it has a lot of space to borrow.
It also still has roughly two months’ worth of import coverage in foreign reserve holdings that it can spend to keep the dong from depreciating.
Where Vietnam’s economic growth lands in 2026, therefore, will only partially be the result of its economic performance, and instead more contingent on government policy and what level of risk it is willing to accept.
That the UOB, WB, and ADB are forecasting an average of 7 percent would suggest, however, that risk, on a 10 percent GDP growth target, will probably need to be quite big.