UOB Bank (Singapore) affirmed that it is maintaining an optimistic but cautious view on Vietnam's economic prospects. It forecasts that GDP in the first quarter of 2025 will reach 7.1%. By 2026, the growth rate is expected to increase to 7.4%.
Vietnam’s GDP in Q4/2024 grew by 7.55% year-on-year, extending the upward momentum from a revised 7.43% in Q3/2024 and exceeding market expectations. With three consecutive strong quarters, the Vietnamese economy grew by 7.09% in 2024, significantly higher than the 5.1% in 2023, surpassing the consensus forecast of 6.7% and the official target of 6.5%. This is the highest growth since the post-COVID recovery in 2022.
Vietnam's National Assembly on February 19 raised the 2025 growth target to "at least 8%" and aimed for "double-digit" growth in 2026-2030, while the official forecast remained at 6.5-7%.
“While growth of 8% or higher is possible, exports and manufacturing alone will not be enough to drive the economy to such outstanding growth,” UOB Bank said.
Considering the above factors, the Global Market and Economic Research Department, UOB Bank (Singapore) forecasts Vietnam's economy in the first quarter of 2025 as follows: GDP in the first quarter of 2025 will reach 7.1%. By 2026, the growth rate is expected to increase to 7.4%, thanks to the Government's efficiency improvement measures.
"We maintain a cautiously optimistic view on Vietnam's prospects," UOB Bank stressed.
According to UOB, Vietnam will need to increase capital investment, especially from the public sector, not only to expand growth but also to mitigate the negative impact of a trade downturn. Vietnam's capital investment ratio has been maintained at around 30% of GDP for at least the past decade. Meanwhile, China's total investment has always been above 40% of GDP over the same period. "This shows that Vietnam is investing at a lower level than its larger neighbor, and there is clearly a basis for boosting public investment, especially when the Government targets double-digit growth in the future," the report said.
VND likely to continue to weaken
Vietnam is vulnerable to disruptions and conflicts in international trade, especially in the context of US President Donald Trump focusing on measures to address trade imbalances.
The VND is expected to continue weakening. The VND fell to a record low of around VND25,600 per USD in early March 2025, after the State Bank of Vietnam increased the USD selling price to banks to VND25,698 from VND25,450/USD, marking the first adjustment since October last year.
“However, several factors could help ease the VND depreciation pressure, including strong domestic growth prospects and the SBV’s commitment to ensuring “exchange rate stability,” according to UOB.
According to UOB's forecast, the USD/VND exchange rate is 25,800 in Q2 2025, 26,000 in Q3 2025.
Source: https://phunuvietnam.vn/uob-du-bao-gdp-viet-nam-tang-71-vao-quy-i-2025-20250313144019549.htm
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