Vietnam’s GDP growth is expected to moderate to 5.8% this year, driven by rising trade policy uncertainty, according to the World Bank’s latest East Asia and Pacific Economic Update. Despite the near-term slowdown, the bank maintains a positive medium-term outlook, forecasting growth to rebound to 6.1% in 2026 and 6.4% in 2027.
The report also warns that growing uncertainty could further dampen consumer confidence and spending, both of which have been lagging behind GDP growth in recent years. Vietnam’s external exposure remains significant, with the United States accounting for 30% of its exports and China 38% of its imports. This reliance makes the country vulnerable to global trade distortions and external shocks, the World Bank noted.
Additionally, financial sector vulnerabilities persist, with the average loan-loss coverage ratio among 26 banks falling to 83%, down sharply from 150% in 2022. Although the government has fiscal space to stimulate demand, underperformance in public investment disbursement could undermine these efforts.
World Bank cautioned that stronger-than-expected disruptions in global trade or a sharper global economic slowdown could negatively impact Vietnam’s exports, foreign direct investment (FDI), and private sector growth. Despite these challenges, Vietnam continues to make progress in poverty reduction. The share of the population living on less than $3.65 per day is projected to decline from 3.8% in 2024 to 3.6% this year. However, slower growth in the agriculture sector may limit further gains for the country’s poorest communities.
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