UOB raises Vietnam growth forecast

UOB raised its forecast for Vietnam's GDP growth in 2025 to 7% and said the Government 's target of at least 8% is ambitious but still feasible.

A recently released report by United Overseas Bank (UOB) raises its forecast for Vietnam's GDP growth this year to 7% from its previous 6.6%. This decision comes after the economy grew by 7.09% last year, far exceeding the market's general forecast of 6.7% and the official target of 6.5%.

"We expect positive developments from domestic drivers such as manufacturing, consumer spending, and tourism to contribute to activity, especially in the first half of the year," the report stated.

These factors, combined with a more positive external outlook, lead UOB to expect the US government – Vietnam's largest export market – to implement additional tariffs in a more calculated and flexible manner.

In 2025, the National Assembly set a growth target of 6.5-7%, while the Government projected at least 8% or 10% under favorable conditions, creating momentum for double-digit growth in the next phase, aiming to become a high-income country by 2045.

According to the Singaporean bank, based on the approach focused on fiscal discipline and how public investment has been disbursed so far, the 8% target "seems quite ambitious but there is still room to achieve."

At the regular press conference of the Government on January 8, Deputy Minister of Planning and Investment Nguyen Duc Tam said that there is a basis for the economy to grow by 8% this year. According to him, innovation and institutional improvement continue to be one of the important driving forces to help achieve high growth results. Along with that, public investment has also been focused on disbursement since the beginning of the year. Traditional growth drivers such as consumption and export have also been focused on by the Government to consolidate and renew.

Regarding challenges, UOB believes that uncertainty about trade prospects will be a major risk for Vietnam in the second half of the year. This is because the economy is increasingly dependent on exports, which are projected to reach a record high of over $400 billion in 2024, nearly equaling the nominal GDP of $450 billion.

Exchange rate pressure remains present. The USD is forecast to strengthen further in the first half of the year, following the return of Donald Trump. International markets have adjusted their expectations, with fewer interest rate cuts from the US Federal Reserve (Fed), meaning the USD's strength continues to consolidate.

Meanwhile, the VND is likely to be affected by Trump's tariff policies, the trend of the Chinese yuan, and the Fed's interest rate policy. UOB forecasts the USD/VND exchange rate at 25,800 VND in Q1, 26,000 in Q2, 26,200 in Q3, and 26,000 in the last three months of the year.

Given the uncertainty surrounding the Fed's interest rate adjustment cycle and geopolitical/trade tensions, the bank expects the State Bank of Vietnam to keep the policy interest rate unchanged at 4.5%.

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