News and Insights

• Vietnam's GDP grew by 8.46% YoY in the last quarter of 2025, accelerating from 8.25% level in 3Q25 and bringing full-year growth to reach an impressive 8.02%, which met the government’s target of 8% and exceeded market expectations.
• The manufacturing sector remained the primary engine, while consumption continued to improve but still played a secondary role in GDP growth expansion.
• TThe VN-Index closed the final trading week of the year at 1,784 points, ending 2025 with a 40.87% gain. Market gains throughout 2025 remained highly concentrated, with Vingroup-affiliated names accounted for over 400 points of the index’s annual rise, highlighting the outsized influence of a single conglomerate on headline market performance. The remaining of the market increased by 12.6% during 2025, of which more than half of stocks traded on HOSE finished the year in red.

 

Vietnam's GDP grew by 8.46% YoY in the last quarter of 2025, accelerating from 8.25% level in 3Q25 and bringing full-year growth to reach an impressive 8.02%, which met the government’s target of 8% and exceeded market expectations. The faster pace of growth in 4Q25 was primarily driven by stronger activities in both manufacturing and services sector, which saw 9.7% YoY and 8.8% YoY growth in 4Q25, with broad-based expansion seen across sub-sectors. On the expenditure front, final consumption and gross capital formation grew by 7.95% and 8.68%, respectively, while trade surplus reached USD 20,03 billion in 2025 (2024: USD 25 billion). Nominal GDP amounted to USD 514 billion, translating to a GDP per capita of USD 5,026 (2024: 4,700). Fiscal conditions improved markedly, with budget revenue up nearly 30% YoY, public debt contained at ~37% of GDP, and accelerated public investment supporting infrastructure delivery. While the headline figures are impressive, we view 2025 primarily as a year of cyclical normalization rather than a structural inflection point. The more durable benefits of ongoing reforms are expected to materialize from 2026 onward.

 

The manufacturing sector remained the primary engine, expanding 9.97% YoY with the index of industrial production (IIP) expanding by 9.9% YoY in 4Q25 and 9.2% YoY in 2025. Exports and imports maintained double-digit growth in 4Q25 at 20%/21.3% YoY, respectively, which is the most notable upside surprise. For 2025, exports surged 17% YoY and imports rose 19.4% YoY, far exceeding early year expectations shaped by concerns over global protectionism and tariff policies. By sector, FDI-led exports rose sharply by 26.1% YoY, in line with a 48.4% YoY increase in electrical and machinery exports, as these tech-related products, mostly coming from FDI firms, continued to be exempted from tariffs. However, productivity gains remain modest with real labor productivity grew 6.83%, an encouraging improvement but still below GDP growth, signaling that expansion remains largely input-driven. Foreign direct investment remained a bright spot, with 2025 disbursements achieving strong growth of 9% YoY to reach USD 27,6 billion and 2025 commitments moderating by 0.5% YoY from a high base to USD 38,42 billion. Looking ahead to 2026, the outlook for Vietnam’s manufacturing continued to be attractive as a production hub amid supply-chain diversification.

Consumption continued to improve but still played a secondary role in GDP growth expansion. December retail sales increased by 10% YoY, which is a strong rebound after two months heavily impacted by severe weather conditions. For 2025, retail sales grew by 9.2% YoY (below pre-Covid levels of 10-12%) with real growth reached 6.7% YoY, which remained below headline GDP growth, underscoring that 2025’s expansion was export-and production-led. Tourism activities gained momentum as the number of international visitors notched a high level at 21,2 million in 2025, which was 118% of pre-COVID level in 2019.

December saw headline CPI rising 0.19% MoM and 3.5% YoY, easing from 0.45% MoM and 3.58% YoY in November, thanks to a pronounced deflation in the transportation sub-index (-1.8% MoM). For the full-year 2025, inflation came in at 3.3% YoY on average, well below the Government’s target range of 4.0% – 4.5% YoY, reflecting easing key food and foodstuff prices and waning crude oil averages in 2025 relative to 2024. 

Interbank activities became markedly more buoyant towards the year end and the SBV continues to pursue selective easing while recalibrating its operational framework. Interbank rates spiked sharply amid tightening short-term liquidity, with the VND overnight rate briefly reaching 7.5% in early December, the highest since Oct 2022, before easing to an average of 4% in the last week of the year, following aggressive liquidity injections via open market operations and FX swaps. The SBV also raised the reverse repo rate by 50bps to 4.5% on December 8, while still net injected VND 110tn in November and VND 78,5tn in December. These operations lifted outstanding OMO balance to a record VND 409tn by the year end, underscoring the SBV’s pivotal role in stabilizing system liquidity. While the VND ON rate moderated, the USD ON rate continued to decline, reaching 3.6% as of the year end. Consequently, the VND-USD ON spread widened significantly, providing support for the exchange rate stability. The VND appreciated by 0.25% MoM against the USD in December and depreciated 3.2% YTD. The spread between the free market and official USD/VND exchange rates has narrowed to 1.4%. 

The VN-Index closed the final trading week of the year at 1,784 points, ending 2025 with a 40.87% gain. The index advanced 3.16% in the final week, supported mainly by year-end positioning activities, including window dressing and seasonal year-end optimism. Market gains throughout 2025 remained highly concentrated, with Vingroup-related stocks continuing to dominate index performance. On a full-year basis, Vingroup-affiliated names accounted for over 400 points of the index’s annual rise, highlighting the outsized influence of a single conglomerate on headline market performance. The remaining of the market increased by 12.6% during 2025, of which more than half of stocks traded on HOSE finished the year in red. Liquidity conditions improved materially over the year, with average daily trading value reaching USD 1,22 billion, up more than 40% YoY. Foreign investors turned to net buyers in December with inflows of USD 90 million, bringing net foreign outflows totaled USD 5 billion in 2025, topped by VIC (USD 874 million), VHM (USD 450 million) and FPT (USD 444 million). 

The real estate, utilities and energy sector led the VN-Index higher in December with strong performance from Vingroup, GAS and PVD. Financial sector stocks, which account for roughly 38% of the VN-Index, rose higher as credit growth data for the year came in quite strong (+17.9% as of December 24). Sector laggards in December included Materials, Industrials and Consumer staples. 

 

The VN-Index is currently trading at a trailing P/E ratio of 17.3x, higher than its average P/E ratio of 17x over the past five years. For 2026, corporate earnings growth is estimated to reach 14% (vs. 16% in 2025) and 2026 forward P/E reached 12.9x, lower than a 5Y average of 13.9x. Excluding Vingroup stocks, 2026 P/E is only at 11x based on our forecast, suggesting an earnings yield of 9.4%, still more attractive than a deposit rate (6-7% in 2026).