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UOB raises Vietnam growth forecast

Việt NamViệt Nam10/01/2025

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 achievable.

United Overseas Bank (UOB) has raised its forecast for Vietnam’s GDP growth this year to 7% from 6.6% previously, a report released on Tuesday said. The decision comes after the economy grew 7.09% last year, far exceeding the market consensus of 6.7% and the official target of 6.5%.

“We expect positive developments from domestic drivers such as manufacturing, consumer spending and tourist arrivals to contribute to activity, especially in the first half of the year,” the report said.

These factors are compounded by a more positive external outlook, with UOB expecting the US government – Vietnam’s largest export market – to implement additional tariffs in a more measured and flexible manner.

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

Based on the bank's focus on fiscal discipline and the way public investment has been disbursed so far, the 8% target "looks quite ambitious but there is still room for improvement," the Singapore-based bank said.

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 helping growth achieve high 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.

On the challenge front, UOB believes that uncertainty over the trade outlook will be a major risk for Vietnam in the second half of the year, as the economy is increasingly reliant on exports, which have risen to a record high of over US$400 billion by 2024, close to the size of its nominal GDP of US$450 billion.

Exchange rate pressures remain. The USD is expected to strengthen further in the first half of the year, following the return of Donald Trump. International markets have revised their expectations, with fewer rate cuts from the US Federal Reserve (Fed), meaning the strength of the USD continues to consolidate.

Meanwhile, VND is likely to be affected by Mr. Trump's tariff policy, the trend of the Chinese yuan and the Fed's interest rate policy. UOB forecasts the USD/VND exchange rate at VND25,800 in the first quarter, VND26,000 in the second quarter, VND26,200 in the third quarter and VND26,000 in the last three months of the year.

Given the uncertainty around the Fed's rate-setting cycle and geopolitical/trade tensions, the bank expects the State Bank to keep its policy rate unchanged at 4.5%.


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