According to Dragon Capital, Vietnam’s growth momentum strengthened in March following Lunar New Year normalisation, reinforcing confidence that the expansion remained firmly intact through the first quarter of 2026. GDP grew 7.8 per cent on-year in the first quarter, with industry and construction rising 8.9 per cent and services 8.2 per cent, highlighting that growth is not solely reliant on exports and manufacturing, but is increasingly supported by services and domestic demand.

The confirmation of Vietnam’s leadership structure reinforces political stability and policy continuity, providing investors with clearer economic visibility over the next five-year government cycle. Nonetheless, global markets turned more volatile following the escalating Iran conflict in early March, shaping near-term sentiment despite Vietnam’s stable macro fundamentals, placing downward pressure on the VN-Index.

Industrial activity remained a key pillar. The Index of Industrial Production (IIP) increased 9 per cent on-year in the first quarter, with manufacturing expanding 9.7 per cent and driving the majority of growth. March recorded a strong rebound, with IIP rising 18.8 per cent from a month ago and 6.9 per cent on-year.

Business conditions remained expansionary, with Purchasing Managers' Index moderating to 51.2 from 54.3 in February, reflecting normalisation from a high base rather than weaker demand. Expansion remained broad-based across sectors, including metals (up 22.9 per cent), non-metallic minerals (up 19.7 per cent), chemicals (up 18.2 per cent).

Domestic demand remained firm. Retail sales and services revenue rose 12.1 per cent on-year in March and 10.9 per cent in the first quarter, reaching approximately $72.3 billion. Accommodation and food services increased 13.3 per cent on-year, while tourism-related services grew 12.5 per cent, supported by seasonal demand and continued recovery in travel activity.

This trend supports earnings visibility for consumer-facing sectors, which have become an increasingly important driver of market performance in recent years, and reinforces consumption as a stable and increasingly important support to economic expansion.

Dragon Capital noted that investment and external activity continued to underpin expansion. Goods exports rose 19.1 per cent on-year in the first quarter, while imports increased 27 per cent, reflecting strong trade demand. Business formation remained active, with over 57,000 new enterprises (up 57.8 per cent on-year) and registered capital of approximately $20.5 billion. Including firms restarting operations, total active additions reached around 96,000 (up 31.7 per cent), highlighting continued private-sector dynamism.

The consumer price index rose 4.6 per cent on-year in March, the highest March reading in five years, bringing the first quarter average inflation to 3.5 per cent on-year, driven mainly by higher fuel prices amid US-Iran tensions. However, both remain within the government’s 4.5–5.0 per cent target, preserving policy flexibility to absorb external shocks.

In addition, equity markets turned more volatile in March, entering a corrective phase after the strong rally earlier in the year. The VN-Index declined 11.9 per cent on-month in total return USD terms as global markets priced in geopolitical tensions. The correction was sector-agnostic, suggesting a broad derisking rather than specific weakness.

Average daily trading value remained resilient at around $1.3 billion, supported by domestic participation, while foreign flows remained intermittent. By month-end, the VN-Index stabilised from its lows, suggesting the adjustment was driven primarily by external factors rather than any change in domestic fundamentals.