Following 7.5 per cent growth in the first six months and expectations of further stimulus, UOB revised its full-year GDP forecast to 7.5 per cent, up from 6.9 per cent. Vietnam’s real GDP expanded 7.96 per cent on-year in the second quarter, outpacing Bloomberg’s 6.85 per cent estimate and UOB’s own 6.1 per cent projection, bringing first-half growth to its highest level since 2011.

UOB’s September 17 report highlighted that Vietnam’s strong first-half growth was underpinned by a 14 per cent on-year export surge, boosted by improved sentiment after the US lowered its 'Liberation Day' tariff on April 2 to a temporary 10 per cent baseline for 90 days. Tariff uncertainty eased further in the second half as the US finalised country-specific rates ahead of the August 1 deadline, with Vietnam’s rate set at 20 per cent.

Data from July indicates that growth momentum remains positive, though the outlook is tempered by tariff developments. Exports rose 17 per cent on-year to a record $42.3 billion, bringing year-to-date growth close to 16 per cent. However, the trade surplus narrowed to $9.5 billion in the first seven months, compared to $14 billion a year earlier, due to higher imports from front-loaded export orders.

"Despite tariff pressures, annual exports could still rise by about 10 per cent (compared to 14 per cent in 2024), assuming a moderate 1–5 per cent pace for the rest of 2025," UOB said in the report.

Other indicators also signal resilience. The Purchasing Managers’ Index rebounded to 52.4 in July after three straight months below 50, while manufacturing output rose 9 per cent on-year despite a high base. Overseas capital inflows remained strong, with $13.6 billion in realised investment as of July, up from $12.6 billion in the same period last year, suggesting full-year inflows could surpass $20 billion (compared to $25.4 billion in 2024).

Amid external headwinds, Vietnam announced a $48 billion infrastructure scheme in mid-August, spanning 250 projects. Of these, 129 state-funded initiatives worth $18 billion will prioritise urban development and transport, while 121 projects valued at $30.5 billion will draw financing from other sources, including foreign enterprises.

"Despite tariff threats and uncertainty, Vietnam’s economy continues to show resilience and dynamism. Export performance has been particularly strong, though risks remain if US demand weakens amid tariff-induced price pressures," UOB said.

Following robust 7.5 per cent growth in the first half of 2025 and expected support from stronger government investment, UOB revised its full-year GDP forecast to 7.5 per cent, up from 6.9 per cent previously and just under 7.1 per cent in 2024. Growth is projected at 7.6 per cent on-year in the third quarter and 7.2 per cent in the fourth. For 2026, UOB maintains its projection at 7 per cent. By comparison, the government is targeting 8.3–8.5 per cent growth this year.

Inflation, however, shows little sign of easing. Headline inflation reached 3.3 per cent year-to-date in July, versus 3.6 per cent on average in 2024 and 3.26 per cent in 2023. Housing and construction materials (5.9 per cent on-year average so far, with an 18.8 per cent weighting) and healthcare (18 per cent on-year average, with a 5.4 per cent weighting) remain the main drivers.

"Combined with decent growth prospects in the second half of 2025 and persistent VND weakness, these factors would constrain the State Bank of Vietnam’s (SBV) ability to ease policy," UOB said, expecting the refinancing rate to remain at 4.5 per cent.

"If business and labour market conditions deteriorate sharply, there is a possibility for the SBV to cut the refinancing rate in a single step to the COVID-19 low of 4 per cent, though this is not our base case," the report added.

Bucking the regional trend, the VND slid to a record low of 26,436 per USD in August, down 3.4 per cent year-to-date and marking its fourth straight year of depreciation. While Vietnam secured a trade deal with the US that lowered tariff rates to 20 per cent from the 46 per cent announced in April, uncertainty remains over the 40 per cent transhipment tariff.

"This could prompt firms to reassess supply chain strategies, potentially dampening Vietnam’s attractiveness for foreign investment," UOB said.

Looking ahead, the VND may continue to underperform compared to regional peers in capturing any upside from expected US Federal Reserve rate cuts. UOB’s upward revision of Vietnam’s GDP growth forecast to 7.5 per cent in 2025, from 7.1 per cent in 2024, could lend some support. Its updated USD/VND projections are 26,300 in the fourth quarter of 2025, 26,200 in the first quarter of 2026, 26,100 in the second, and 26,000 in the third.