Vietnam’s robust growth will be supported by the continued manufacturing capacity expansion and further recovery of consumption and the real estate sector, following ongoing structural reforms. However, in light of global trade dispute risks, the bank’s economic outlook assumes 2025 foreign direct investment (FDI) sees no year-on-year acceleration although the levels could remain relatively strong.

Despite Vietnam’s vulnerability to trade disputes, Citi economists do not price-in major negative impacts to growth forecasts. Given the possibility of negotiations and deals being made later on, thereby easing tensions, the economists refrain from penciling in large negative shocks to the forecasts for the real economy.

Vietnam’s domestic growth engine should further warm up in 2025 amid ongoing structural reforms. Citi experts expect the real estate sector and consumer confidence to further recover after slowly picking up from the downturn in 2023. This follows a series of structural reforms and regulatory revisions in 2024 including the implementation of laws concerning land matters, governance in the banking sector and financial markets.

Amol Gupte, head of Citi’s Asia South business

Citi sees real estate recovery gaining traction in 2025, thereby reducing systemic risks in the financial system and putting domestic consumption recovery on a more stable footing. Clearer sectoral regulations may also open-up room to tackle government capex bottlenecks. This should eventually endow Vietnam with needed fiscal policy options to support the economy via spending.

“Vietnam is a prominent market for Citi in Asia,” said Amol Gupte, head of Citi’s Asia South business, at Citi’s Asia South Banking 2025 outlook. “As there is a structural shift in supply chains towards ASEAN and India in recent years, Vietnam has emerged as one of the largest recipients of relocations and we continue to support our clients across this key market for Citi.”