Vietnam's GDP grew by 8.23% YoY in the third quarter of 2025, accelerating from 6.9% YoY in 1Q25 and 8.19% YoY in 2Q25, despite the impact of challenging US tariff and several domestic storms during the quarter. The faster growth pace was primarily driven by stronger activity in both industry & construction sector (+9.46% YoY) and services sector (+8.56% YoY). As a result, GDP growth for the first nine months of 2025 reached 7.85% YoY, roughly tracking the government’s 8% base-case. On the expenditure front, gross capital formation grew by 8.97% YoY, and final consumption increased 7.79% YoY in the quarter. With expectations of positive momentum in manufacturing activities, robust investments, and ongoing recovery in consumption, we maintain an optimistic outlook for the economy in 4Q25.
The manufacturing sector continued to strengthen, with the index of industrial production (IIP) expanding by 10% YoY in 3Q25 and 9.1% YoY in 9M25, driven by resilience in manufacturing (+10.4% YoY vs 9M24 of 9.6% YoY). The acceleration of manufacturing activity was supported by double-digit growth of export (+18.4% YoY in 3Q25 and September +24.7% YoY), despite US tariffs. Electronics and machinery exports were the main drivers, up strongly +50.1% YoY and 17.1% YoY in the quarter, respectively. Trade balance reached USD 2.8 bn in September and USD 16.8 bn in 9M25. Vietnam’s manufacturing PMI remained steady at 50.4 in September, unchanged from August but above the 50 threshold for the third consecutive month, signaling a mild improvement in operating conditions. The uptick was supported by a rebound in new orders and more stable export flows. Foreign direct investment (FDI) was also a bright spot, with YTD disbursements achieving strong growth of 8.5% YoY to reach USD 18.8 bn, highest in the past 5 years.
Consumption continued strong momentum in September, with retail sales increasing by 11.3% YoY and consumption for the quarter increased +10.1% YoY, which is encouraging compared to 2Q25 of 9% YoY. For the first nine months of 2025, retail sales grew by 9.5% YoY, on track to reach pre-COVID levels of 10-12%. Several domestic storms likely created some negative impact on retail consumption in September, but we remain optimistic that the strength witnessed in manufacturing, trade, and investments will translate into stronger income for the consumers, which will drive higher retail consumption.
September saw headline CPI rising 0.42% MoM, primarily driven by higher private school education services (+2.22% MoM), food prices (+0.41% MoM) and materials for housing and repair (+0.41% MoM). Headline inflation reached 3.38% YoY in September, and thus, inflation averaged 3.27% YoY over the past nine months, still in check within the Government’s target range of 4.0% – 4.5% YoY for 2025. Core inflation remained intact at 3.19% YoY in 9M25.
The Vietnamese dong slipped a further 0.3% MoM against the USD in September, as the Fed delivering its first 25 bp rate cut of the year was in line with market expectations. USDVND ended the month up 3.7% YTD, with State Treasury registrations to purchase USD 200 mn, underscoring firm dollar demand. Into the year-end, we expect depreciation pressure to ease, supported by (i) additional Fed easing 50bps, (ii) tighter regulation of the gold market, and (iii) improving foreign portfolio flows alongside Vietnam’s market upgrade. On liquidity, the SBV executed a net injection of VND 3.4 tn in September, leaving outstanding system liquidity around VND185 tn—little changed from August. Interbank overnight rates averaged ~4.2% for the month, signaling improved funding conditions, and—unlike late June/July—there were no signs of one-off liquidity stress. Deposit rates remained broadly stable in September, although some commercial banks started raising rates for selected tenor and customers, mobilized for faster credit growth in Q4.
VNIndex retreated 1.2% MoM, breaking the uptrend that ran from May through August. Average daily turnover fell to USD 1.3 bn (-31.3% MoM; still +112% YoY) after July-August’s record. Foreign investors remained net sellers with USD 1 bn in September, concentrating outflows in Financials, Real Estate, Materials, and Consumer Discretionary. Top foreign net sells included VHM (-USD 92.6 mn), SSI (-USD 90.6 mn) and MWG (-USD 60.9 mn). In contrast, top foreign buys were HVN (+USD 19.2 mn), VNM (+USD 18.4 mn) and GEX (+USD 14.2 mn). Year-to-date, foreign net selling has reached USD 3.9 bn (vs. USD 3.5 bn in 2024), likely driven by (i) profit-taking pressure as the index approaching 1700-point level, (ii) USDVND pressure, (iii) investor’s caution while awaiting the FTSE upgrade review and (iv) funding needs for IPOs and new issues.
By sector, most groups declined, with the exception of Real Estate (+11.9% MoM), Healthcare (+1.5% MoM) and Industrial (+1.3% MoM). Within Real Estate, performance diverged sharply: VIC (+36% MoM) continued to lead and support the index, while many peers lagged. Financials (-6.7% MoM) and IT (-7.6% MoM) were the top lagging sectors. Banks and brokers suffered post-rally profit-taking, and IT sentiment was weighed by U.S. H-1B fee hikes under the Trump administration and broader global tech headwinds amid AI competition.
Valuation remains undemanding. VNIndex trades at 16x trailing P/E, below the 5-year average of 17x. Forward P/Es are 13.1x (2025) and 11.3x (2026), alongside expectations for solid EPS growth of 15% YoY in 2026. After September’s volatility, we expect consolidation into early October before the market pivots to Q3 earnings. Key October catalysts: (i) FTSE Russell’s market-upgrade announcement (Oct 8), (ii) listings/IPO activity (TCBS, VPBS, VPS, HPA, GEX Infrastructure, etc.), and (iii) Q3 GDP and corporate results.
