VINACHEM

Amid global economic turbulence driven by geopolitical instability, trade conflicts, and tight monetary policies, Vietnam has emerged as a rare bright spot.

The first half of 2025 saw a robust economic surge, fueled by expansive fiscal and monetary policies, abundant FDI inflows, and vibrant export-import activities.

14-year high GDP growth rate

According to the General Statistics Office, Vietnam’s GDP in Q2 2025 grew by 7.96 percent, second only to the peak of 8.56 percent in Q2 2022 in the 2020–2025 period. For the first six months, growth reached 7.52 percent, the highest since 2011.

This figure not only surprised international observers but also defied the global economic slowdown. The World Bank has forecast global growth at 2.3 percent for 2025, the UN at 2.4 percent, the IMF 2.8 percent, and OECD at 2.9 percent, meaning that Vietnam’s growth is nearly triple the global average. This success is largely attributed to proactive and flexible fiscal and monetary policies.

Regarding monetary policy, credit growth reached 8.30 percent, significantly higher than the 4.85 percent of the same period last year. Approximately VND1.3 quadrillion was injected into the national economy.

The State Bank of Vietnam has committed to a 16 percent credit growth target for the year, with potential for further increases if needed.

As for fiscal policy, regular expenditure reached VND776 trillion, accounting for 49.5 percent of the budget estimate and up 40.8 percent year-on-year. The expenditure on development and investment hit VND268.1 trillion, or 33.9 percent of the budget, up 42.3 percent.

The Ministry of Finance noted that the budget overexpenditure could rise to 4–4.5 percent of GDP, exceeding the planned 3.8 percent, to support growth. The expenditure on development and investment is projected to reach VND791 trillion but could be adjusted to nearly VND1 quadrillion. Additionally, tax and fee exemptions, reductions, and deferrals worth over VND230 trillion continue to be implemented.

Industrial production sustains strong recovery

In the first six months of 2025, industrial production thrived, with the Industrial Production Index (IIP) rising 9.2 percent compared to the previous year, the highest since 2020. This compares to an 8.0 percent increase in the same period of 2024.

The processing and manufacturing sector, a key driver, grew by 11.1 percent, up from 8.9 percent the previous year. In Q2 2025 alone, the IIP rose 10.3 percent, with processing and manufacturing surging by 12.3 percent.

Notable growth was recorded in provinces like Phu Tho (46.6 percent), Nam Dinh (33.0 percent), Bac Giang (27.5 percent), Thai Binh (25.3 percent), Ha Nam (22.8 percent), Vinh Phuc (18.8 percent), and Quang Ngai (18.3 percent).

FDI accelerates, solidifying manufacturing hub status

FDI remained a highlight, with Vietnam attracting $21.52 billion in registered capital in the first half of 2025, up 32.6 percent from 2024. Implemented FDI reached $11.72 billion, the highest in four years.

Vietnam continues to benefit from global supply chain relocations, as multinational corporations seek new destinations. Institutional reforms, improved investment climates, and expanded high-tech industrial zones have reinforced Vietnam’s position as Asia’s manufacturing hub.

Booming trade, record trade surplus with the US

The total trade turnover in the first half of 2025 reached $432.03 billion, up 16.1 percent year-on-year. Exports grew by 14.4 percent, imports by 17.9 percent, resulting in a trade surplus of $7.63 billion.

Notably, the trade surplus with the US hit a record $62 billion (up 29.1 percent). The US continued to be Vietnam’s largest export market with $70.91 billion in turnover. Vietnam also recorded trade surpluses of $19 billion with the EU and $1.2 billion with Japan.

Conversely, trade deficits with China ($55.6 billion) and South Korea ($14.6 billion) reflected heavy reliance on inputs from these countries.

Amid global uncertainties, particularly US tariff policies, will this trend continue or reverse? The impact remains a critical question.

Challenges ahead

Besides external risks, Vietnam faces domestic challenges, including slow public investment disbursement, while infrastructure, green transition, and digitalization needs are urgent.

Meanwhile, SMEs struggle to access credit and land, institutional reforms lack breakthroughs, and state-owned enterprise equitization lags. And macroeconomic risks persist.

Predictions

International organizations have been cautious in their 2025 growth forecasts for Vietnam, projecting lower figures than the first half’s performance. The World Bank predicts 5.8 percent growth (down 1.3 percentage points), the IMF 5.4 percent (down 1.7 percentage points), and the OECD a higher 6.2 percent (down 0.9 percentage points).

In contrast, regional peers like the Philippines (5.3 percent, down 0.4 points), Indonesia (4.7 percent, down 0.3 points), and Thailand (1.8 percent, down 0.7 points) are expected to slow. Despite these conservative projections, Vietnam’s first-half performance demonstrates remarkable acceleration, bucking the regional trend of stagnation or deceleration.  – Source: VNN