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Market Insights July 2026

Manufacturing, Exports, and Investment Accelerate, Driving GDP Growth to Multi-Year High

IN BRIE

• Growth hit a multi-year high, powered by industry/manufacturing and public capital. Q2 GDP rose 8.39% YoY (H1: 8.18%), led by industry and construction (+10.51%), with manufacturing (+10.56%) and electricity/gas (+12.19%) out front. Public disbursement hit a YTD high (VND 137tn in June) and FDI inflows accelerated (disbursed +11.2%, registered +55.9% YoY).
• Trade set records on both sides but the deficit is widening. June exports topped $50bn for the first time (+28.1% YoY), driven by electronics (+60.8%) and machinery (+30.5%). But imports grew even faster (+45%), leaving a $2.64bn June deficit and $16.6bn for H1, the largest half-year gap in the report.

• Macro conditions are stabilizing, but several soft spots remain. CPI eased in June (-0.39% MoM) yet H1 average inflation is still a 3-year high (4.38%). Interbank liquidity improved sharply, but the stock market is in consolidation (VN-Index flat, liquidity down ~26% MoM, foreign investors net-sold VND 79.8tn in H1).

Q2 2026 GDP grew 8.39% year-on-year, lifting H1 growth to 8.18%, the highest in several years. Industry and construction remained the main growth driver, up 10.51% in Q2. Manufacturing led the pack, rising 10.56%; electricity and gas distribution grew 12.19%; construction rose 10.28%. The numbers reflect a strong rebound in export orders, layered on top of growing spillover from public investment disbursement.

Trade told a mixed story. June export turnover topped $50 billion for the first time, up 28.1% year-on-year, while imports jumped 45% to $53.4 billion. Tech products drove the export side: electronics and computers up 60.8%, machinery and equipment up 30.5%, phones up 18.6%, all pointing to steady global demand for digital infrastructure and AI applications. Domestic enterprises are recovering too, with export growth hitting 15% in June on the strength of key agricultural and aquaculture products such as rice, fruit and vegetables, and seafood. A handful of basic industries, including chemicals, plastic raw materials, and paper, posted double-digit growth, suggesting the manufacturing recovery is broad-based.

Import growth was mostly about machinery, equipment, and production inputs. That left Vietnam with a $2.64 billion trade deficit in June and $16.6 billion for H1. Because most of that import demand is for production materials, it should support export growth in the coming quarters. Even so, export growth during the year-end peak season needs close watching to confirm whether the positive trend is holding. A prolonged trade deficit, on the other hand, would put real pressure on exchange rate stability.

Public investment continues to play a critical role as a key growth engine. June disbursement reached approximately VND 137 trillion, marking a year-to-date high and nearly doubling the previous month's figure, which indicates a strong acceleration in project execution. Cumulatively for the first half of the year, disbursed public investment totaled VND 356.9 trillion, equivalent to 35.5% of the Prime Minister's annual target. This outcome reflects gradual progress in resolving bottlenecks related to land clearance, investment procedures, and project implementation. Additionally, more stable raw material prices and transportation costs have provided favorable conditions for contractors to expedite construction, reinforcing expectations for further disbursement improvements in the second half of the year.

FDI inflows also recorded a clear accelerating trend, with both registered and disbursed capital hitting year-to-date highs. In the first six months, disbursed FDI reached $13 billion, up 11.2% YoY, while total newly registered and additional capital surged 55.9% to $28.4 billion. This robust growth in foreign investment underscores Vietnam's sustained appeal as a prime destination amid global supply chain restructuring, while laying a supportive foundation for the technology, manufacturing, and export sectors in the coming years.

Inflationary pressure showed signs of cooling in June as CPI decreased by 0.39% MoM. This decline was primarily driven by lower domestic fuel prices following global oil price adjustments, which significantly reduced transportation costs. However, average H1 inflation still rose 4,38% YoY, hitting a three-year high. This indicates that price pressures have not been fully eliminated and remain a critical metric to monitor, particularly as domestic demand recovers and credit growth accelerates.

Domestic consumption continued to improve, driven by rising household income and sentiment, which were supported by positive economic growth and lower fuel prices. Total retail sales of goods and consumer services in June reached a record VND 665.6 trillion, up 14.8% YoY. For the first half of the year, retail revenue increased 12.9% in nominal terms and 7.3% in real terms, indicating a relatively solid recovery in domestic demand. Meanwhile, growth in international tourist arrivals slowed due to seasonality, as Q2 is typically the off-peak season for the tourism industry.

Money Market: In the money market, banking system liquidity improved significantly following a period of stress in the early months of the year. Over-night interbank interest rates declined to around 3-4% for most of late June—substantially lower than the 5-7% range seen in the previous month—before spiking at the end of the month due to seasonal factors. Amid improved liquidity, the State Bank of Vietnam (SBV) gradually scaled back short-term support via open market operations (OMO), net-absorbing VND 86.9 trillion. This reduced outstanding OMO value significantly to VND 245 trillion, down from its February peak of VND 489 trillion. Despite low interbank rates, exchange rates faced no upward pressure, with the interbank exchange rate fluctuating around 26,300, remaining virtually unchanged since the beginning of the year.

Notably, the SBV recently implemented a series of measures to stimulate credit growth from both the supply and demand sides. These include easing the short-term funding ratio for medium- and long-term loans from 30% to 40%, enhancing the utilization of State Treasury deposits, simplifying credit access conditions for small-scale loans, and excluding outstanding balances of several key projects when calculating credit growth caps. These moves indicate a policy shift toward prioritizing economic growth and large-scale investment, while maintaining a cautious approach to policy rates. Instead of broad-based monetary easing, the regulatory body is choosing to expand credit supply capacity specifically for sectors and projects deemed strategic growth engines. This approach creates headroom for credit acceleration while mitigating risks to macroeconomic stability.

Stock Market: The VN-Index closed June essentially flat, down 0.2% month-on-month, wrapping up a strong Q2 that gained 11.1%. VN30 barely moved either, down 0.1%, showing large caps held steady as the market entered a consolidation phase after a sharp rally.

Market breadth told a different story. Only 4 of 11 sectors closed the month in the green, led by Financials (+1.5%) and Real Estate (+0.9%). The other seven declined, and Energy fell hardest, down 13.8%, correcting sharply after a hot run, followed by Utilities (-5.8%), Materials (-3.8%), and Healthcare (-2.5%). Year-to-date, Energy (+30.4%) and Real Estate (+19.1%) remain the two top-performing sectors.

Liquidity kept weakening as trading stayed subdued. Total order-matching value on HOSE was just VND 303 trillion in June, down 25.9% month-on-month and 49.2% versus March. Foreign investors kept selling, VND 15.3 trillion net in June, bringing the cumulative H1 net outflow to VND 79.8 trillion. The VN-Index's trailing 12-month P/E held steady at 15.2x, below the 5-year average of about 17x, though rising rate pressure is making equities less attractive regardlessn.