News and Insights

Vietnam’s economy continued its growth trajectory in April, buoyed by the ongoing momentum in the manufacturing sector and a robust retail sales growth. The Index of Industrial Production (IIP) saw a 8.9% year-on-year rise in April and 8.4% YoY in 4M25, higher than last year of 6.3% YoY. Manufacturing remains the primary engine of this growth, with output expanding by 10.1% YoY in 4M25, compared to 9.5% YoY in Q1. Exports gained significant momentum on the back of orders pulling forward due to reciprocal tariffs. Exports and imports increased by 21% YoY and 23% YoY in April, respectively, bringing the overall trade balance to USD 3.8bn as of April. Market focus now turns to upcoming reciprocal trade negotiations, with the first round of discussions scheduled to commence on May 7, a development that may help shape the outlook for external trade in the months ahead. In contrast, PMI dropped back below the 50.0 in April at 45.6, signaled a marked monthly deterioration. Manufacturing new orders decreased markedly in April, reversing the expansion seen in March. We believe the key discrepancy lies in the smaller sample size of PMI and it only reflects month-on-month changes.

Retail sales momentum is building, up 11.1% YoY in April or 9.9% for the first four months of 2025. Real consumption grew 7.7% YoY in 4M25, suggesting domestic consumption is beginning to strengthen. The data may also indicate the end of the "rolling recovery" phase, with consumption growth starting to align more closely with the pace of industrial output. In 4M25, tourism revenue soared by 24.5% year-on-year, with total international tourist arrivals up 24% YoY, equivalent to 129% of pre-Covid levels with Chinese tourists increased by 57% YoY.

As of April, Vietnam had disbursed 14.32% of its 2025 public investment plan, equivalent to VND 128.5 tn, an increase of 16.34% YoY. Notably, April data indicates a faster disbursement pace compared to the Q1 average However, the disbursement remains behind schedule due to the expanded budget. The Finance Ministry urges faster Q2 disbursement, noting stronger local execution. Foreign direct investment (FDI) continues to be a key pillar of economic strength, even amid challenges posed by reciprocal tariffs. In 4M25, registered FDI surged to USD 13.8 bn, marking a strong 39.9% YoY increase. Disbursed FDI reached USD 6.74 bn (+7.3% YoY), closely aligned with Q1 average, reflecting sustained confidence among foreign investors in Vietnam’s long-term prospects.

Headline inflation remained nearly unchanged in April, closing the month with a 0.07% month-on-month increase. The marginal rise in the consumer price index was mainly driven by higher accommodation and construction material prices (+0.62 MoM%) on the back of higher electricity prices (+1% MoM). On 4M25 average, CPI rose by 3.2% YoY, well below the government’s target thanks to lower gasoline prices. Core inflation remained stable at 3.14% year-on-year in April, indicating that inflation is likely to remain under control by the end of the year.

The Dong depreciated by 1.7% MoM and approximately 2% YTD against the US dollar after the announcement of reciprocal tariffs, despite DXY declining 8.5% YTD. Further to FDI profit repatriation in the month, uncertainties around Vietnam’s final tariffs raise concerns for exports and FDI prospects, triggering pressure on the Dong. The interbank market remained relatively stable and did not interact significantly to the tariff shock. The SBV net withdrew VND 22.2tn by the end of April via open market operation while the overnight interbank interest rates declined significantly towards the end of the month to reach 2.5%, indicating ample liquidity in the system.