UOB hikes Vietnam's 2025 GDP growth forecast to 7.5%

According to UOB’s Global Economics & Markets Research unit, Vietnam’s GDP expanded 7.52% from a year earlier in the first half, the quickest pace for the period since 2011.

The robust growth was propelled primarily by a 14% year-on-year surge in exports, bolstered by improved market sentiment following U.S. President Donald Trump’s temporary reduction of reciprocal tariffs to a baseline 10% rate for trading partners over 90 days.

Tariff uncertainties abated in the second half of this year after the U.S. locked in country-specific rates ahead of the Aug. 1 deadline, with Vietnam’s levy set at 20%.

While tariff pressures remain, UOB expects Vietnam’s exports to grow about 10% in 2025, assuming a moderate 1-5% year-on-year expansion over the remainder of the year. Exports grew 14% last year.

Other indicators further highlighted the economy’s resilience. Vietnam's Manufacturing Purchasing Managers' Index (PMI) rebounded to 52.4 in July after three consecutive months below the 50-point contraction threshold. Industrial output rose 9% year-on-year.

Realised FDI reached $13.6 billion as of July, up from $12.6 billion a year earlier, suggesting full-year inflows could surpass $20 billion, as against $25.4 billion last year.

Amid external headwinds, Vietnam in mid-August unveiled a $48 billion infrastructure investment plan covering 250 projects. The government will finance 129 projects worth $18 billion, focusing on urban development and transport. The remaining 121 projects, valued at $30.5 billion, will draw on other sources, including foreign companies.

For 2026, UOB maintained its growth forecast at 7%. The government is targeting a GDP growth of 8.3-8.5% this year.

UOB analysts said Vietnam’s strong outlook for the second half of the year, along with pressure on the Vietnamese dong, will likely leave the central bank little room to cut rates. They expect the refinancing rate to stay at 4.5%.

If business conditions and the labor market weaken sharply, the rate could be reduced to its pandemic-era low of 4%, but this is outside of UOB's base-case scenario.

On the currency front, the lender said the dong will not fully benefit when the U.S. dollar weakens, a move expected once the Federal Reserve starts cutting rates.

Even so, pressures are likely to ease. UOB forecasts the dollar exchange rate at VND26,300 in the last quarter of this year, VND26,200 in the following quarter, and VND26,000 by the third quarter of 2026.