2025 has been a year of strong momentum for Vietnam’s recovery, according to OECD. — VNA/VNS Photo Trần Việt

HÀ NỘI — The Organisation for Economic Co-operation and Development (OECD) has revised upward its medium-term outlook for Việt Nam, projecting GDP growth of 6.2 per cent for 2026 and 5.8 per cent for 2027, according to its latest global economic outlook released on December 2.

The report signals continued macroeconomic stability in Việt Nam despite persistent global trade uncertainties.

OECD notes that 2025 has been a year of strong momentum for Việt Nam’s recovery. GDP expanded by 8.2 per cent in the third quarter of 2025, driven by robust final consumption, firm growth in fixed capital formation and buoyant exports of goods and services. Labour market conditions remain resilient, with unemployment at 2.2 per cent since the third quarter of 2024, its lowest level on record, while labour force participation continues to rise, reflecting a stable and improving employment environment.

However, OECD highlights that external demand is expected to soften in 2026, weighing on exports, one of the economy’s key growth pillars. As a highly open, trade-dependent economy, Việt Nam remains vulnerable to global policy developments.

On the domestic front, private consumption is projected to stay firm, supported by rising real wages and employment. However, OECD cautions that the planned VAT adjustment in 2027 could temporarily dampen consumer spending. Inflation is expected to edge up, driven by solid domestic demand, higher administrative prices and a one-off impact from the VAT hike.

In contrast, public investment is set to play a critical role in sustaining growth. After earlier delays in disbursement, public investment is accelerating and is expected to provide a strong anchor for aggregate demand. OECD has accordingly upgraded Việt Nam’s 2026 growth forecast by 0.2 percentage points compared with its June 2025 projections.

Exports and FDI remain key engines of growth

Despite the volatile global environment, Việt Nam’s exports of goods and services have remained remarkably resilient. In the first nine months of 2025, export turnover rose 15.5 per cent, up from 14.2 per cent in the first half of the year. Shipments to the US – Việt Nam’s largest export market, accounting for around 30 per cent of total exports – surged 27.7 per cent, even as risks of US import tariffs persist.

Foreign direct investment (FDI) has also continued to expand steadily since mid-2023. OECD underscores that FDI not only provides essential capital for Việt Nam’s development but also promotes technology diffusion and productivity gains, reinforcing its role as a critical engine of long-term growth.

Fiscal policy is expected to remain expansionary in the near term as the Government seeks to accelerate public investment to meet its ambitious 2025 growth target of around 8 per cent. However, OECD recommends a gradual shift toward a more neutral fiscal stance over the medium term, particularly as inflationary pressures build. The temporary VAT reduction from 10% to 8% is scheduled to end in late 2026, adding to upward pressure on prices alongside planned hikes in pensions, the minimum wage and public service fees.

The monetary policy stance has been accommodative since June 2023, using both interest rate cuts and direct credit growth targets for banks. The increases in pensions, the minimum wage, administrative prices and the VAT increase will add to price pressures in 2026 and 2027. As domestic demand remains solid, the central bank should closely monitor inflation risks and stand ready to withdraw support.

OECD identifies several downside risks to Việt Nam’s outlook, including a potential slowdown in global trade from 2026, tighter international investment conditions and policy shifts in major economies that could affect Vietnam’s export competitiveness or expose it to transshipment-related tariffs.

According to OECD, reforms to the macroeconomic and structural policy frameworks could lead to stronger economic performance. Moving towards a more price-based monetary policy would improve macroeconomic resilience and facilitate stronger competition in financial markets, potentially improving the allocation of capital and raising productivity. Informality affects around two-thirds of employees, limiting social protection coverage and holding back productivity growth. Stronger incentives for formal job creation could result from efforts to reduce the lower labour tax wedge while enhancing the role of non-contributory social protection benefits.

Regulatory reforms hold significant potential to boost productivity. Opening up services markets to competition and foreign direct investment can facilitate the move into higher-value ladders of global value chains, as competitive service inputs can have significant productivity benefits for downstream manufacturing companies. Reducing the weight of state-owned enterprises and levelling the playing field with private firms could allow additional labour and capital to move to more productive firms.

Although growth is projected to ease moderately in 2026–2027, OECD affirms that Việt Nam remains among Asia’s fastest-growing economies – a view echoed by other major international institutions. HSBC recently upgraded Việt Nam’s 2025 and 2026 growth forecasts to 7.9 per cent and 6.7 per cent, the highest in ASEAN. UOB expects growth of 7.7 per cent in 2025, while Standard Chartered forecasts 7.5 per cent for 2025 and 7.2 per cent for 2026. — VNA/VNS