OECD Economic Outlook, Volume 2026 Issue 1

Viet Nam

GDP is projected to grow by 6.5% in 2026 and 6.2% in 2027, marking a slowdown amid uncertainty stemming from the evolving conflict in the Middle East and US trade policy. Private consumption will remain buoyant due to steady increases in wages and employment. Investment growth will be supported by the implementation of public-sector-led projects under the new five-year plan. Exports will remain robust partly due to the surging demand for new technology but are subject to downside risks.

The monetary policy stance is expected to remain accommodative and fiscal policy is expected to be expansionary, as the authorities pursue their ambitious growth target of 10% average growth over 2026 to 2030. Improvements in the macroeconomic policy framework and financial sector reforms could improve resource allocation and bolster productivity. Further efforts to ease foreign investment restrictions in services and level the playing field between private and state-owned enterprises could strengthen competition and productivity, while a more comprehensive social protection system would improve resilience to shocks.

Activity has been robust

GDP grew by 8.0% in 2025 and has remained strong in the first quarter of 2026, with GDP increasing by 7.8% year-on-year. Private consumption remained resilient, underpinned by increases in wages and employment. Public investment was strong, supported by progress in infrastructure projects. The labour market is tight with a historically low unemployment rate of 2.2%, and the labour force participation rate increased to 68.7% toward the end of 2025, followed by a slight decline to 68.3% in the first quarter of 2026. Headline and core inflation both rose in April 2026, to 5.5% and 4.7%, respectively. Fuel and transport prices increased by 11.1% year-on-year.

Vietnam

Source: CEIC.

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Viet Nam: Demand, output and prices

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Exports remained robust throughout 2025 and maintained their momentum in early 2026. Despite the imposition of US tariffs, goods exports remained strong against the backdrop of surging demand for semiconductor-related goods. Services exports have also remained strong, particularly in the tourism sector. Foreign direct investment (FDI), an important driver of growth for Viet Nam, has continued its steady increase. With more than 80% of Viet Nam’s oil imports coming from the Middle East, Viet Nam is strongly exposed to the evolving conflict in the Middle East.

Macroeconomic policies should be ready for shocks

Fiscal policy will continue to support growth through increased public investment, pursuing an ambitious growth target of 10% average growth over 2026 to 2030. The fiscal deficit of the general government is expected to widen to 4.8% of GDP this year, mainly due to tax cuts in response to higher energy prices. The current energy-related tax cuts include setting import tariffs and the environmental protection tax on petroleum products to zero until end-June. Considering that public debt, at 31.5% of GDP in 2025, is well below the 60% ceiling, Viet Nam has fiscal space to address emerging medium-term spending pressures and short-term spending needs. The monetary policy stance, defined through quantitative credit targets, has been accommodative since June 2023 and is expected to remain supportive during 2026 and 2027.

Growth is expected to slow amidst downside risks

GDP growth is projected to slow to 6.5% in 2026 and 6.2% in 2027 amid higher energy prices and measures to limit energy use. Private consumption will remain buoyant due to strong wages and employment, while the higher energy-related costs and the planned VAT rate increase at the beginning of 2027 will likely dampen private consumption temporarily and keep inflation elevated. Investment growth will be supported by public-sector-led projects under the new five-year plan. However, if project implementation falls short of schedule, the growth effect may turn out lower or materialise later. Exports are expected to lose momentum in 2026 as possible supply disruptions, increased transport costs and the phase-out of front-loaded foreign demand, including on semiconductor-related products, take their toll. Service exports, particularly those related to tourism, are expected to remain robust. As a small trade-dependent economy and a net importer of oil and gas from the Middle East, Viet Nam is particularly vulnerable to higher energy prices and energy shortages, including of refined fuels. Additional downside risks stem from trade policy uncertainty and a possible increase in non-performing loans.

Reforms could strengthen productivity and social outcomes

The central bank should closely monitor inflation risks from rising energy prices and related second-round effects and stand ready to tighten monetary policy if needed. Moving towards a price-based monetary policy would improve macroeconomic resilience and facilitate stronger competition in financial markets, potentially improving the allocation of capital and raising productivity. Regulatory reforms, such as opening up services markets to competition and FDI, hold significant potential to boost productivity, in addition to reducing the weight of state-owned enterprises and levelling the playing field with private firms. Informality affects around two-thirds of employees, limiting resilience and holding back productivity growth. Stronger incentives for formal job creation could result from efforts to reduce the labour tax wedge for low-income earners while enhancing the role of non-contributory social protection benefits. Investing in climate-change adaptation measures will be key to enhance climate resilience against floods, typhoons and rising sea levels. Tax cuts on fuels should remain time-bound, while stronger efforts to accelerate the rollout of renewable energy sources would help support both energy security and emission reductions.