Economic growth is stable in the third quarter of 2025

GDP growth exceeds market expectations: Vietnam's GDP expanded 8.2% in annual terms in Q3, unchanged from the previous quarter's reading and marked the joint-strongest performance since Q3 2022, when the economy rebounded sharply from the Covid-induced recession. Moreover, Q3’s reading far exceeded economists’ expectations of a deceleration from Q2 levels amid the 20% U.S. tariff introduced in August.

Resilient external sector drives economic momentum: Compared to the previous period's data, the reading for the industrial sector improved in Q3 (+9.5% yoy vs +8.8% in Q2). In contrast, readings worsened for the services sector (+8.6% vs +9.1% in Q2) and the agricultural sector (+3.7% vs +4.0% in Q2). The exceptional third-quarter performance was underpinned by buoyant external trade activities, which have held firm despite the 20% U.S. tariff active since August, and a steady stream of foreign investment flowing into the country. The tourism sector also lent fresh vigor to economic growth, with visitor arrivals surging 23% year on year, more than doubling Q2’s pace as Vietnam cements its comeback as one of Asia’s travel hotspots. Moreover, a lending splurge is likely adding fuel to the expansion, with the Central Bank expecting credit growth of 19%–20% this year, a push that’s buttressing private consumption and keeping the economic engine humming.

U.S. tariffs to gnaw at economic growth: Although Vietnam’s sizzling third-quarter GDP growth reading keeps the economy on course to meet the government’s ambitious 8.3%–8.5% full-year target, our panelists have penciled in a deceleration in the final quarter of 2025. A high base effect looms large, and the bite of U.S. tariffs is expected to sap export strength. Vietnam’s economy is highly exposed to tariffs, with goods and services exports accounting for 83% of GDP—the second-highest ratio in ASEAN after Singapore’s towering 182%—and goods shipments to the U.S accounting for about 30% of total merchandise exports, its largest share. As a result, in 2025 as a whole, Vietnam’s economic growth is set to fall short of the government’s 2025 target, with our Consensus aligning more closely with the 6.6% and 6.5% forecasts from the World Bank and IMF. While this would mark a deceleration from 2024’s strong pace, 2025 GDP growth should still stand tall among ASEAN peers, underscoring the country’s resilience amid global headwinds.

Panelist insight: Commenting on the outlook, Suan Teck Kin and Peter Chia, analysts at United Overseas Bank, stated: “While Vietnam’s trade activities appeared to be robust so far despite US tariffs, one potential outcome is that exports orders could start to fade once the frontloading of orders ease and higher prices affect US consumer demand especially into 2026. […] Due to a high base in 4Q 2024, we anticipate the final quarter would be a challenge given a backdrop of tariffs and trade frictions. […] It would be even more daunting to achieve the official 8.3-8.5% projection, which would require 4Q25 expansion of 9.7-10.5% y/y.”

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