Facing reciprocal tariffs, UOB lowered Viet Nam's growth outlook for 2025 and 2026 across the board to factor in the sharp negative impact on global trade and investment flows.

For Viet Nam, the bank slashed its growth forecast by 1 per cent to 6 per cent from before April.

Looking ahead, the next critical milestone will be July 9, when the 90-day pause on U.S. tariffs is set to expire. According to news reports, Viet Nam has been engaging the U.S. in trade negotiations, with the second round of discussions held from May 19-22. The next round is set for the end of June.

Economic activities have picked up with the 90-day reprieve, with both exports and imports in April rising more than expected from a year earlier, at 20 and 23 per cent, respectively, due to frontloading in the 90-day window. Exports to its largest market, the U.S., surged by 34 per cent on-year, the fastest pace since January 2024.

With looming uncertainty over tariffs, UOB remains cautious on Viet Nam's outlook, given its heavy dependence on trade (exports at 90 percent of GDP), reliance on the U.S. (about 30 percent of total exports), and concentration in key sectors such as electronics and electrical, furniture, apparel and footwear, which collectively make up 80 per cent of exports to the US.

"We maintain our call for Viet Nam's full-year growth forecasts at 6 percent in 2025 and 6.3 percent in 2026, with growth projections for the second and the third quarter at 6.1 percent and 5.8 percent, respectively," the UOB report highlighted.

Viet Nam's inflation rate slowed somewhat, to around 3.1 per cent on-year in both March and April, decelerating from the average of 3.6 percent in 2024 and 3.26 percent in 2023, staying below the 4.5 percent target.

Viet Nam's GDP was estimated to grow by 6.93 percent in January-March period, the highest growth rate in the first quarter since 2020.

Based on the first quarter growth rate, the economy needs to expand by 8.2 percent in the second quarter, 8.3 percent and 8.4 percent in the third and fourth quarter to achieve the whole-year growth goal of at least 8 percent./.