News and Insights

• Vietnam’s macro picture for February 2026 remains mixed but overall positive, characterized by a continued two-speed growth trajectory. Production leads the recovery, with industrial output up 10.4% YoY. On the flip side, domestic consumption remains sluggish; real retail sales for the first two months grew just 4.5% YoY, marking a sharp drop from the 6.8% pace seen in 2025.
• Inflation remains well-controlled, which provides policymakers with ample room to manage potential energy price shocks stemming from current geopolitical volatility.
• The VNIndex continued another positive month, returning 2.8% in February  to close at 1,880.3, marking its fourth straight month of gains. While the US-Israel-Iran conflict has triggered a global risk-off environment that pressures most equities, Vietnam's strong GDP growth and an anticipated FTSE upgrade in September 2026 are expected to provide medium term catalysts for the stock market.

 

Due to the timing of the Tet holiday—which traditionally introduces significant month-on-month volatility—we have analyzed the combined data for the first two months of 2026 to ensure a normalized year-over-year assessment. Vietnam’s macro picture for February 2026 remains mixed but overall positive, characterized by a continued two-speed growth trajectory. Production leads the recovery, with industrial output up 10.4% YoY. On the flip side, domestic consumption remains sluggish; real retail sales for the first two months grew just 4.5% YoY, marking a sharp drop from the 6.8% pace seen in 2025.

 

The manufacturing sector remained resilient in Jan-Feb, with the index of industrial production (IIP) surging 10.4% YoY, a sharp acceleration from 2M25 growth of 7.5% YoY. Manufacturing output expanded significantly across the board, with sector growth rates ranging from 8.0% (electronics) to 33.1% (non-metallic minerals). Heavy industry was the primary driver, though consumer goods, vehicles, and traditional exports (textiles, wood, food) all posted strong double-digit gains. Exports grew 18.3% and imports surged 26.3%, creating a USD 2.98 billion trade deficit. However, with 94.1% of imports being production materials, this serves as a strong signal for future industrial output. PMI climbed to 54.3 in February, up from 52.5 in January and marking a four-month high, signaling a solid monthly improvement in sector health and extending the run of strengthening business conditions to eight consecutive months.

On the investment front, indicators continue to show positive signs. Robust budget revenues (+13.1% YoY) underpinned strong investment momentum in the first two months. Public investment disbursement surged 24% YoY to VND 55.7 trillion, while disbursed FDI hit a five-year high for the Jan-Feb period at USD 3.21 billion (+8.8% YoY). Collectively, these grant policymakers' headroom to stimulate growth without risking macro stability.

While commercial and service activities appeared vibrant during the February Tet holiday, underlying domestic consumption remained relatively subdued in the first two months of 2026. Nominal retail sales and consumer services grew by 7.9% year-over-year (with February alone up 8.5%), but when excluding inflation, real growth registered at just 4.5%—a notable deceleration from the 6.8% real growth seen in the same period of 2025. The primary bright spots in consumption were driven by the tourism sector rather than domestic goods; accommodation and food services rose 9.1%, while travel revenues surged 12.2%, heavily bolstered by an 18.1% year-over-year jump in international arrivals (reaching 4.7 million visitors).

Inflation remains well-controlled, with the average Consumer Price Index (CPI) for the first two months rising 2.94% YoY (while core inflation stood at 3.47% YoY). Looking at February specifically, CPI rose 1.14% month-over-month and 3.35% YoY, primarily driven by a temporary surge in Lunar New Year demand. This seasonal holiday effect was most visible in food and catering services (+2.02% MoM) alongside culture, entertainment, and tourism (+1.36% MoM). This contained inflation environment provides policymakers with ample room to manage potential energy price shocks stemming from current geopolitical volatility.