UOB Raises Vietnam’s 2026 GDP Growth Forecast To 8.5%

Vietnam’s economy delivered an impressive 8.18% GDP growth in the first half of 2026, exceeding expectations despite continued global uncertainties. In light of this strong performance, United Overseas Bank (UOB) has revised its 2026 GDP growth forecast for Vietnam upward to 8.5%, from its previous projection of 7.0%…

According to UOB Singapore’s Vietnam Economic Outlook for the First Half of 2026, Vietnam’s GDP growth accelerated to 8.39% year-on-year in the second quarter of 2026, up from 7.94% in the first quarter, bringing overall economic growth for the first six months of the year to 8.18%.

Despite prolonged geopolitical tensions in the Middle East and persistently high energy prices, Vietnam’s economic performance significantly outperformed UOB’s earlier expectations, reflecting broad-based growth across the industrial, construction, services, and agricultural sectors.

Economic Growth Surpasses Expectations

According to UOB, the manufacturing and processing sector remained the primary driver of economic growth in the second quarter of 2026, supported by robust global demand for artificial intelligence (AI) technologies.

Citing data from Vietnam’s General Statistics Office (GSO), UOB noted that industrial production continued to expand at a strong pace. During the first six months of 2026, industrial production increased by 10.8%, compared with 8.7% during the same period in 2025. The manufacturing and processing industry alone recorded 11.4% growth, making the largest contribution to overall industrial expansion.

Despite uncertainties arising from geopolitical tensions in the Middle East and higher energy costs, the ongoing global trend of supply chain diversification continues to benefit Vietnam.

The outlook for foreign direct investment (FDI) also remains highly positive. Registered FDI in the first half of 2026 reached nearly USD 34.7 billion, representing a 61% increase from USD 21.5 billion recorded during the same period in 2025.

UOB analysts believe this indicates strong FDI disbursement prospects in the coming months and reinforces expectations that 2026 could become Vietnam’s record year for FDI inflows.

Based on these achievements, UOB considers Vietnam to remain the fastest-growing economy in ASEAN so far in 2026. By comparison, other regional economies recorded first-quarter growth ranging from 2.8% to 6.0%, and their second-quarter performance is also expected to remain below Vietnam’s.

Supported by stronger-than-expected first-half economic performance, sustained momentum in AI-related industries, and easing energy prices, UOB has upgraded its 2026 GDP growth forecast to 8.5%, from 7.0% previously.

“However, this forecast remains below the Government’s 10% growth target. Nevertheless, Vietnam’s economy has demonstrated remarkable resilience against the impacts of the Middle East conflict, providing a solid foundation for continued growth in the second half of 2026,” UOB stated.

Caution Amid Global Risks

Despite the encouraging growth outlook, UOB highlighted that Vietnam’s trade balance deteriorated, recording a trade deficit of approximately USD 15 billion during the first half of 2026, compared with a trade surplus of USD 7.9 billion during the same period last year.

The primary reason was the sharp increase in fuel import costs resulting from the conflict in the Middle East. During the first five months of 2026 alone, imports of petroleum products reached USD 4.8 billion, equivalent to approximately 70% of Vietnam’s total petroleum imports for the entire year of 2025.

However, as the United States and Iran have resumed negotiations and the Strait of Hormuz has reopened to shipping, energy prices are expected to gradually ease. Consequently, UOB expects Vietnam’s trade balance to return to a surplus by the end of 2026.

Nevertheless, the external sector still warrants close monitoring. Vietnam remains a highly open economy that depends significantly on global trade cycles, including:

• Strong global demand for AI-related products;
• Fluctuations in global energy prices; and
• Changes in U.S. trade policy.

According to UOB, Section 301 tariffs, scheduled to take effect at the end of July, may place additional pressure on global trade and could affect Vietnam’s growth momentum in the coming months.

Inflation And Exchange Rate Remain Under Control

Regarding inflation and monetary policy, UOB noted that average inflation during the first half of 2026 reached 4.38%, while core inflation stood at 4.12%, both remaining below the Government’s 4.5% inflation target.

Given the combination of solid economic growth and manageable inflation and exchange rate pressures, UOB expects the State Bank of Vietnam (SBV) to keep its policy interest rates unchanged for the remainder of 2026.

In the foreign exchange market, the USD/VND exchange rate remained relatively stable at around VND 26,300 per USD throughout June.

UOB believes the Vietnamese dong will continue to remain stable, supported by the country’s solid economic fundamentals and the SBV’s exchange rate management policies. In addition, Vietnam’s potential upgrade to emerging market status in September 2026 is expected to encourage greater portfolio investment inflows into the domestic capital market.

UOB maintains its forecast that the USD/VND exchange rate will gradually decline over time, projecting:

• 26,500 in Q3 2026;
• 26,400 in Q4 2026;
• 26,300 in Q1 2027; and
• 26,100 in Q2 2027.