OECD Economic Outlook, Volume 2025 Issue 1

Viet Nam

GDP growth is projected to slow to 6.2% in 2025 and 6.0% in 2026, as global policy uncertainty dampens foreign investment and exports. Private consumption will remain buoyant amid rising real wages. Planned increases in public investment will support domestic investment, but foreign investment inflows are expected to weaken. Inflation is projected to pick up. As a trade-dependent economy, Viet Nam remains highly exposed to external developments.

The monetary policy stance is expected to remain accommodative, but vigilance is needed amid emerging inflationary pressures. Fiscal policy is expected to support growth in 2025 by working off a past backlog of public investment projects but should eventually turn more neutral. Improvements in the macroeconomic policy framework and financial sector reforms could improve resource allocation and bolster growth, while a more comprehensive social protection system could improve resilience to shocks. An accelerated rollout of renewable energy sources in the power sector could make growth more sustainable.

Activity has been strong

GDP increased by 7.1% in 2024, after moderate growth of 5.1% in 2023. Final consumption, gross capital formation and exports of goods and services all contributed to the steady expansion. Unemployment has fallen to a historic low of 2.2% in March 2025, the underemployment rate has fallen, and labour force participation has risen. Headline inflation has declined from its recent peak of 4.4% in May 2024, reaching 3.1% in April 2025. Core inflation fell to 2.5% in September 2024 but has since picked up again.

Viet Nam

Note: Core inflation excludes food and foodstuffs; energy and items managed by the state as healthcare and education.

Source: CEIC.

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Viet Nam: Demand, output and prices

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Exports of goods and services increased significantly by 15.5% in 2024, after a mild contraction in 2023. Exports to the United States account for 30% of Viet Nam’s exports of goods and increased by 23.2% in 2024. This makes Viet Nam vulnerable to higher US import tariffs, which are currently 10% but could rise to 46%. Exports to China, Viet Nam’s second largest export market, were essentially flat in 2024. These trends continued in the first three months of 2025. Foreign direct investment has been a driver of growth and increased since mid‑2024.

Macroeconomic policies could become more neutral if inflation rises

Fiscal policy will continue to support growth through increased public investment in the near term, as the government seeks to make up for past undershooting of investment plans. Emerging inflationary pressures, however, would eventually suggest moving from an accommodative fiscal stance towards a more neutral one. The central bank has maintained an accommodative monetary policy stance since June 2023, using both interest rate cuts and direct credit growth targets for banks. This stance is expected to continue. With a robust recovery underway, the focus should be on closely monitoring inflation risks that could arise from increases in pensions and the minimum wage, as well as expected increases in administrative prices, and monetary policy should stand ready to tighten if needed.

Growth is projected to weaken

GDP is projected to increase by 6.2% in 2025 and 6% in 2026 on the back of domestic demand, while export demand and foreign direct investment inflows will be weaker until policy uncertainty dissipates. Private consumption will be supported by continued increases in real wages and employment, with investment buoyed by accelerated public investment disbursements. Inflation is projected to rise due to strong domestic demand, and there is a risk that these inflationary pressures turn out stronger than projected, although lower export demand could weaken them. As foreign direct investment and exports have been Viet Nam’s principal growth engines, higher trade barriers and continued policy uncertainty constitute major downside risks to the outlook. If trade barriers in export markets diminish Viet Nam’s attractiveness as an investment destination, growth could weaken substantially.

Structural reforms would strengthen investment, social protection and sustainability

Reducing barriers to foreign ownership in services sectors would promote continued inflows of foreign direct investment. Social benefits, including old-age pensions, remain patchy amid widespread labour informality. Well-coordinated reforms to expand non-contributory social assistance benefits while maintaining strong incentives for formal job creation would support both resilience to shocks and productivity. Reducing emissions from electricity generation by phasing out coal-fired plants and accelerating the rollout of renewable energy sources will be key for more sustainable growth. Foreign-owned firms have been a driver of growth but have developed few supplier links to local firms. More investment in tertiary education could foster these links and strengthen productivity, combined with stronger competition in services sectors and a more even playing field between private and state‑owned companies.